DCF Studio

    0300.HK · HKG · Consumer Cyclical

    Midea Group Co., Ltd.

    Also onConsensus Drift

    Implied value per share

    HKD 171.48

    Market price

    HKD 99.30

    Implied upside

    +72.7%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case · CNY model at 1.1708

    AdjustedReports in CNY, trades in HKD. Modelled in CNY, converted at the end.
    NoteRisk-free rate is an assumption: HKD assumption - no free live source available for this market.

    Value Per Share

    Perpetuity growth
    HKD 171.48+72.7%
    Exit multiple
    HKD 182.80+84.1%
    Market price
    HKD 99.30

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (CNY). Outflows negative.

    0bn48bn95bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayCNY
    LineFY26FY27FY28FY29FY30CAGR
    RevenueCNY 503.8bnCNY 553.5bnCNY 608.1bnCNY 668.1bnCNY 734.1bn+9.9%
    EBITCNY 49.9bnCNY 54.8bnCNY 60.2bnCNY 66.1bnCNY 72.7bn+9.9%
    NOPATCNY 41.8bnCNY 45.9bnCNY 50.5bnCNY 55.4bnCNY 60.9bn+9.9%
    Add depreciation & amortisationCNY 9.8bnCNY 10.8bnCNY 11.9bnCNY 13.0bnCNY 14.3bn+9.9%
    Less capital expenditureCNY -10.3bnCNY -11.3bnCNY -12.4bnCNY -13.6bnCNY -15.0bn+9.9%
    Less increase in working capitalCNY 23.9bnCNY 26.3bnCNY 28.9bnCNY 31.7bnCNY 34.9bn-9.9%
    Free cashflow to firmCNY 65.3bnCNY 71.7bnCNY 78.8bnCNY 86.6bnCNY 95.1bn+9.9%
    Discount factor0.96530.89940.83800.78080.7275-
    Present valueCNY 63.0bnCNY 64.5bnCNY 66.0bnCNY 67.6bnCNY 69.2bn+2.4%
    Present Value Of The ForecastCNY 330.4bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate3.20%HKD assumption - no free live source available for this market (assumption)
    Equity risk premium7.00%Market assumption
    Beta0.648Reported 0.475, pulled toward 1.0 (Blume)
    Cost of equity7.74%Risk-free + beta x equity risk premium
    Cost of debt3.20%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationCNY 757.6bn91.8% of capital
    Total debtCNY 67.5bn8.2% of capital, book value as a proxy
    Tax rate16.2%Effective, capped at statutory
    WACC7.32%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareCNY 146.46

    70% of EV

    Forecast FCFF, final year
    CNY 95.1bn
    Capex at depreciation, working capital in reinvestment
    CNY 60.9bn
    Less reinvestment at g/ROIC (18.4% of NOPAT)
    CNY -11.2bn
    Capitalised
    CNY 49.7bn
    ROIC (reported)
    13.6%
    Terminal value, undiscounted
    CNY 1056.4bn
    Terminal value, discounted
    CNY 768.6bn
    Enterprise value
    CNY 1098.9bn
    Less net debt
    CNY -18.5bn
    Equity value
    CNY 1117.4bn

    Exit at 13.3x EBITDA

    Value per shareCNY 156.13

    72% of EV

    Terminal value, undiscounted
    CNY 1157.8bn
    Terminal value, discounted
    CNY 842.3bn
    Enterprise value
    CNY 1172.7bn
    Less net debt
    CNY -18.5bn
    Equity value
    CNY 1191.2bn

    Spread between methods: 6%.

    Sensitivity

    Value per share (CNY) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    5.32%197.16213.33235.14266.24314.26
    6.32%160.19168.67179.32193.10211.68
    7.32%135.79140.65146.46153.57162.49
    8.32%118.45121.36124.75128.73133.49
    9.32%105.45107.25109.29111.61114.30

    Outlined: this model. Green text: above today's price of 84.81. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputModelImpliedGap
    Revenue growth, every year9.9%-0.3%-10.1pp
    EBIT margin9.9%5.1%-4.8pp
    Discount rate7.3%11.8%+4.5pp
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.