DCF Studio

    0939.HK · HKG · Financial Services

    China Construction Bank Corporation

    Also onConsensus Drift

    Implied value per share

    HKD 33.81

    Market price

    HKD 9.59

    Implied upside

    +252.5%

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

    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.
    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 33.81+252.5%
    Exit multiple
    HKD 16.34+70.4%
    Market price
    HKD 9.59

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (CNY). Outflows negative.

    0bn169bn339bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayCNY
    LineFY26FY27FY28FY29FY30CAGR
    RevenueCNY 753.6bnCNY 746.5bnCNY 739.5bnCNY 732.5bnCNY 725.6bn-0.9%
    EBITCNY 379.1bnCNY 375.5bnCNY 372.0bnCNY 368.5bnCNY 365.0bn-0.9%
    NOPATCNY 327.7bnCNY 324.6bnCNY 321.5bnCNY 318.5bnCNY 315.5bn-0.9%
    Add depreciation & amortisationCNY 28.9bnCNY 28.6bnCNY 28.3bnCNY 28.1bnCNY 27.8bn-0.9%
    Less capital expenditureCNY -25.1bnCNY -24.8bnCNY -24.6bnCNY -24.4bnCNY -24.1bn-0.9%
    Less increase in working capitalCNY 7.1bnCNY 7.1bnCNY 7.0bnCNY 6.9bnCNY 6.9bn+0.9%
    Free cashflow to firmCNY 338.6bnCNY 335.4bnCNY 332.3bnCNY 329.2bnCNY 326.1bn-0.9%
    Discount factor0.97380.92330.87550.83010.7871-
    Present valueCNY 329.7bnCNY 309.7bnCNY 290.9bnCNY 273.2bnCNY 256.7bn-6.1%
    Present Value Of The ForecastCNY 1460.2bn

    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
    Beta0.494Reported 0.245, pulled toward 1.0 (Blume)
    Cost of equity6.66%Risk-free + beta x equity risk premium
    Cost of debt5.20%Implied cost of debt of 19.5% 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 capitalisationCNY 2508.7bn44.8% of capital
    Total debtCNY 3093.5bn55.2% of capital, book value as a proxy
    Tax rate13.6%Effective, capped at statutory
    WACC5.46%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 28.88

    77% of EV

    Forecast FCFF, final year
    CNY 326.1bn
    Capex at depreciation, working capital in reinvestment
    CNY 315.5bn
    Less reinvestment at g/ROIC (42.9% of NOPAT)
    CNY -135.3bn
    Capitalised
    CNY 180.2bn
    ROIC (reported)
    5.8%
    Terminal value, undiscounted
    CNY 6233.1bn
    Terminal value, discounted
    CNY 4906.1bn
    Enterprise value
    CNY 6366.3bn
    Less net debt
    CNY -1161.4bn
    Equity value
    CNY 7527.7bn

    Exit at 3.3x EBITDA

    Value per shareCNY 13.95

    41% of EV

    Terminal value, undiscounted
    CNY 1291.2bn
    Terminal value, discounted
    CNY 1016.3bn
    Enterprise value
    CNY 2476.6bn
    Less net debt
    CNY -1161.4bn
    Equity value
    CNY 3638.0bn

    Spread between methods: 70%.

    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%
    3.46%50.1857.8573.39122.24—
    4.46%35.4837.2339.8344.1552.86
    5.46%28.1728.4928.8829.3930.12
    6.46%24.2724.3424.4124.4824.55
    7.46%21.7221.7821.8421.8921.95

    Outlined: this model. Green text: above today's price of 8.19. 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
    EBIT margin50.3%7.4%-42.9pp
    Discount rate5.5%40.4%+35.0pp
    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.