DCF Studio

    1109.HK · HKG · Real Estate

    China Resources Land Limited

    Also onConsensus Drift

    Implied value per share

    HKD 265.88

    Market price

    HKD 28.64

    Implied upside

    +828.4%

    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.
    AdjustedReported capital expenditure averages just 0.52% of revenue, which is too low to be the company's real investment - property trusts and similar structures invest through lines that are not reported as capex. Capex has been set to 1.00% of revenue so the forecast is not handed free growth. Override it if the reported figure is right.
    AdjustedCapital expenditure runs at 1.0% of revenue against depreciation of 0.6%. 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 265.88+828.4%
    Exit multiple
    HKD 117.60+310.6%
    Market price
    HKD 28.64

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (CNY). Outflows negative.

    0bn45bn90bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayCNY
    LineFY26FY27FY28FY29FY30CAGR
    RevenueCNY 311.8bnCNY 345.3bnCNY 382.5bnCNY 423.7bnCNY 469.4bn+10.8%
    EBITCNY 57.2bnCNY 63.3bnCNY 70.2bnCNY 77.7bnCNY 86.1bn+10.8%
    NOPATCNY 47.7bnCNY 52.9bnCNY 58.6bnCNY 64.9bnCNY 71.9bn+10.8%
    Add depreciation & amortisationCNY 1.8bnCNY 2.0bnCNY 2.2bnCNY 2.4bnCNY 2.7bn+10.8%
    Less capital expenditureCNY -3.1bnCNY -3.5bnCNY -3.8bnCNY -4.2bnCNY -4.7bn+10.8%
    Less increase in working capitalCNY 13.7bnCNY 15.1bnCNY 16.8bnCNY 18.6bnCNY 20.6bn-10.8%
    Free cashflow to firmCNY 60.0bnCNY 66.5bnCNY 73.7bnCNY 81.6bnCNY 90.4bn+10.8%
    Discount factor0.97500.92690.88110.83760.7962-
    Present valueCNY 58.5bnCNY 61.6bnCNY 64.9bnCNY 68.3bnCNY 72.0bn+5.3%
    Present Value Of The ForecastCNY 325.4bn

    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
    Beta0.792Reported 0.690, pulled toward 1.0 (Blume)
    Cost of equity8.75%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 204.2bn41.5% of capital
    Total debtCNY 287.6bn58.5% of capital, book value as a proxy
    Tax rate16.5%Effective, capped at statutory
    WACC5.19%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 227.09

    82% of EV

    Forecast FCFF, final year
    CNY 90.4bn
    Capex at depreciation, working capital in reinvestment
    CNY 72.0bn
    Less reinvestment at g/ROIC (33.1% of NOPAT)
    CNY -23.8bn
    Capitalised
    CNY 48.2bn
    ROIC (reported)
    7.6%
    Terminal value, undiscounted
    CNY 1834.3bn
    Terminal value, discounted
    CNY 1460.5bn
    Enterprise value
    CNY 1785.9bn
    Less net debt
    CNY 166.5bn
    Equity value
    CNY 1619.4bn

    Exit at 7.9x EBITDA

    Value per shareCNY 100.45

    63% of EV

    Terminal value, undiscounted
    CNY 700.0bn
    Terminal value, discounted
    CNY 557.4bn
    Enterprise value
    CNY 882.8bn
    Less net debt
    CNY 166.5bn
    Equity value
    CNY 716.3bn

    Spread between methods: 77%.

    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%
    3.19%445.72575.43891.132828.62—
    4.19%276.99310.49363.43460.24695.69
    5.19%199.42211.17227.09250.02286.17
    6.19%154.77159.04164.32171.10180.20
    7.19%125.70126.84128.11129.58131.31

    Outlined: this model. Green text: above today's price of 24.46. 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 year10.8%-18.8%-29.6pp
    EBIT margin18.3%2.9%-15.4pp
    Discount rate5.2%23.5%+18.3pp
    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.