DCF Studio

    0388.HK · HKG · Financial Services

    Hong Kong Exchanges and Clearing Limited

    Also onConsensus Drift

    Implied value per share

    HKD 440.43

    Market price

    HKD 388.00

    Implied upside

    +13.5%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case

    Wrong toolThis is a financial. Banks and insurers report no meaningful operating income, and capex and working capital do not mean what a free-cashflow model assumes, so a DCF will misprice it. The model below runs on best-effort numbers - treat it as an illustration, not a valuation.
    NoteRisk-free rate is an assumption: HKD assumption - no free live source available for this market.

    Value Per Share

    Perpetuity growth
    HKD 440.43+13.5%
    Exit multiple
    HKD 449.58+15.9%
    Market price
    HKD 388.00

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (HKD). Outflows negative.

    0bn11bn22bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayHKD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueHKD 26.6bnHKD 29.7bnHKD 33.3bnHKD 37.3bnHKD 41.7bn+11.9%
    EBITHKD 16.1bnHKD 18.0bnHKD 20.1bnHKD 22.5bnHKD 25.2bn+11.9%
    NOPATHKD 14.1bnHKD 15.8bnHKD 17.6bnHKD 19.7bnHKD 22.1bn+11.9%
    Add depreciation & amortisationHKD 2.2bnHKD 2.4bnHKD 2.7bnHKD 3.0bnHKD 3.4bn+11.9%
    Less capital expenditureHKD -2.2bnHKD -2.5bnHKD -2.8bnHKD -3.1bnHKD -3.5bn+11.9%
    Less increase in working capitalHKD -83.7mHKD -93.7mHKD -104.8mHKD -117.4mHKD -131.4m+11.9%
    Free cashflow to firmHKD 14.0bnHKD 15.6bnHKD 17.5bnHKD 19.6bnHKD 21.9bn+11.9%
    Discount factor0.95400.86810.79000.71900.6543-
    Present valueHKD 13.3bnHKD 13.6bnHKD 13.8bnHKD 14.1bnHKD 14.3bn+1.9%
    Present Value Of The ForecastHKD 69.2bn

    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
    Beta0.956Reported 0.935, pulled toward 1.0 (Blume)
    Cost of equity9.90%Risk-free + beta x equity risk premium
    Cost of debt5.20%Implied cost of debt of 435.6% is not a credible funding cost, so risk-free + 2bp is assumed instead. Interest expense and reported debt are measuring different things - common for banks, whose interest expense includes deposits that total debt excludes.
    Market capitalisationHKD 490.4bn99.8% of capital
    Total debtHKD 851.0m0.2% of capital, book value as a proxy
    Tax rate12.4%Effective, capped at statutory
    WACC9.89%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 shareHKD 440.43

    71% of EV

    Forecast FCFF, final year
    HKD 21.9bn
    Capex at depreciation, working capital in reinvestment
    HKD 22.1bn
    Less reinvestment at g/ROIC (14.4% of NOPAT)
    HKD -3.2bn
    Capitalised
    HKD 18.9bn
    ROIC (reported)
    17.3%
    Terminal value, undiscounted
    HKD 262.5bn
    Terminal value, discounted
    HKD 171.7bn
    Enterprise value
    HKD 240.9bn
    Less net debt
    HKD -317.4bn
    Equity value
    HKD 558.3bn

    Exit at 9.8x EBITDA

    Value per shareHKD 449.58

    73% of EV

    Terminal value, undiscounted
    HKD 280.2bn
    Terminal value, discounted
    HKD 183.3bn
    Enterprise value
    HKD 252.5bn
    Less net debt
    HKD -317.4bn
    Equity value
    HKD 569.9bn

    Spread between methods: 2%.

    Sensitivity

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

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    7.89%487.48497.52509.37523.56540.91
    8.89%455.46462.00469.51478.24488.52
    9.89%431.09435.48440.43446.05452.50
    10.89%411.91414.93418.28422.00426.19
    11.89%396.44398.54400.83403.35406.13

    Outlined: this model. Green text: above today's price of 388.00. 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 year11.9%4.0%-8.0pp
    EBIT margin60.5%43.8%-16.7pp
    Discount rate9.9%12.8%+2.9pp
    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.