DCF Studio

    0868.HK · HKG · Basic Materials

    Xinyi Glass Holdings Limited

    Also onConsensus Drift

    Implied value per share

    HKD 6.40

    Market price

    HKD 8.35

    Implied upside

    -23.3%

    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.
    AdjustedCapital expenditure runs at 13.2% of revenue against depreciation of 6.3%. A perpetuity has to be a steady state, so the terminal year uses maintenance capex at depreciation and then charges the reinvestment terminal growth requires (g/ROIC of NOPAT). The bridge is shown under Terminal Value.
    NoteRisk-free rate is an assumption: HKD assumption - no free live source available for this market.

    Value Per Share

    Perpetuity growth
    HKD 6.40-23.3%
    Exit multiple
    HKD 7.63-8.6%
    Market price
    HKD 8.35

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (CNY). Outflows negative.

    0bn1bn2bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayCNY
    LineFY26FY27FY28FY29FY30CAGR
    RevenueCNY 20.2bnCNY 19.6bnCNY 19.1bnCNY 18.5bnCNY 18.0bn-2.9%
    EBITCNY 3.8bnCNY 3.7bnCNY 3.6bnCNY 3.5bnCNY 3.4bn-2.9%
    NOPATCNY 3.3bnCNY 3.2bnCNY 3.1bnCNY 3.0bnCNY 2.9bn-2.9%
    Add depreciation & amortisationCNY 1.3bnCNY 1.2bnCNY 1.2bnCNY 1.2bnCNY 1.1bn-2.9%
    Less capital expenditureCNY -2.7bnCNY -2.6bnCNY -2.5bnCNY -2.4bnCNY -2.4bn-2.9%
    Less increase in working capitalCNY 287.8mCNY 279.5mCNY 271.5mCNY 263.7mCNY 256.1m+2.9%
    Free cashflow to firmCNY 2.2bnCNY 2.1bnCNY 2.0bnCNY 2.0bnCNY 1.9bn-2.9%
    Discount factor0.95110.86030.77810.70380.6366-
    Present valueCNY 2.1bnCNY 1.8bnCNY 1.6bnCNY 1.4bnCNY 1.2bn-12.1%
    Present Value Of The ForecastCNY 8.0bn

    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
    Beta1.196Reported 1.293, pulled toward 1.0 (Blume)
    Cost of equity11.57%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 36.9bn88.5% of capital
    Total debtCNY 4.8bn11.5% of capital, book value as a proxy
    Tax rate14.7%Effective, capped at statutory
    WACC10.56%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 5.47

    69% of EV

    Forecast FCFF, final year
    CNY 1.9bn
    Capex at depreciation, working capital in reinvestment
    CNY 2.9bn
    Less reinvestment at g/ROIC (23.7% of NOPAT)
    CNY -687.6m
    Capitalised
    CNY 2.2bn
    ROIC (WACC floor)
    10.6%
    Terminal value, undiscounted
    CNY 28.2bn
    Terminal value, discounted
    CNY 17.9bn
    Enterprise value
    CNY 26.0bn
    Less net debt
    CNY 2.1bn
    Equity value
    CNY 23.9bn

    Exit at 7.8x EBITDA

    Value per shareCNY 6.52

    74% of EV

    Terminal value, undiscounted
    CNY 35.4bn
    Terminal value, discounted
    CNY 22.5bn
    Enterprise value
    CNY 30.6bn
    Less net debt
    CNY 2.1bn
    Equity value
    CNY 28.5bn

    Spread between methods: 18%.

    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%
    8.56%6.936.987.037.097.15
    9.56%6.086.106.126.156.17
    10.56%5.435.455.475.495.51
    11.56%4.894.914.934.944.96
    12.56%4.444.464.484.494.51

    Outlined: this model. Green text: above today's price of 7.13. 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 year-2.9%5.2%+8.1pp
    EBIT margin18.9%23.5%+4.6pp
    Discount rate10.6%8.5%-2.1pp
    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.