DCF Studio

    1177.HK · HKG · Healthcare

    Sino Biopharmaceutical Limited

    Also onConsensus Drift

    Implied value per share

    HKD 8.64

    Market price

    HKD 5.47

    Implied upside

    +58.0%

    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 5.8% of revenue against depreciation of 4.1%. 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 8.64+58.0%
    Exit multiple
    HKD 8.32+52.1%
    Market price
    HKD 5.47

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (CNY). Outflows negative.

    0bn4bn8bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayCNY
    LineFY26FY27FY28FY29FY30CAGR
    RevenueCNY 34.0bnCNY 36.4bnCNY 38.9bnCNY 41.6bnCNY 44.5bn+6.9%
    EBITCNY 7.5bnCNY 8.0bnCNY 8.6bnCNY 9.2bnCNY 9.8bn+6.9%
    NOPATCNY 6.4bnCNY 6.9bnCNY 7.4bnCNY 7.9bnCNY 8.4bn+6.9%
    Add depreciation & amortisationCNY 1.4bnCNY 1.5bnCNY 1.6bnCNY 1.7bnCNY 1.8bn+6.9%
    Less capital expenditureCNY -2.0bnCNY -2.1bnCNY -2.3bnCNY -2.4bnCNY -2.6bn+6.9%
    Less increase in working capitalCNY 82.8mCNY 88.5mCNY 94.7mCNY 101.3mCNY 108.3m-6.9%
    Free cashflow to firmCNY 5.9bnCNY 6.4bnCNY 6.8bnCNY 7.3bnCNY 7.8bn+6.9%
    Discount factor0.96380.89520.83160.77240.7175-
    Present valueCNY 5.7bnCNY 5.7bnCNY 5.7bnCNY 5.6bnCNY 5.6bn-0.7%
    Present Value Of The ForecastCNY 28.3bn

    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
    Beta0.752Reported 0.630, pulled toward 1.0 (Blume)
    Cost of equity8.46%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 97.5bn85.8% of capital
    Total debtCNY 16.1bn14.2% of capital, book value as a proxy
    Tax rate14.0%Effective, capped at statutory
    WACC7.66%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 7.38

    78% of EV

    Forecast FCFF, final year
    CNY 7.8bn
    Capex at depreciation, working capital in reinvestment
    CNY 8.6bn
    Less reinvestment at g/ROIC (20.0% of NOPAT)
    CNY -1.7bn
    Capitalised
    CNY 6.9bn
    ROIC (reported)
    12.5%
    Terminal value, undiscounted
    CNY 136.8bn
    Terminal value, discounted
    CNY 98.2bn
    Enterprise value
    CNY 126.4bn
    Less net debt
    CNY -6.9bn
    Equity value
    CNY 133.3bn

    Exit at 11.2x EBITDA

    Value per shareCNY 7.10

    77% of EV

    Terminal value, undiscounted
    CNY 129.8bn
    Terminal value, discounted
    CNY 93.1bn
    Enterprise value
    CNY 121.4bn
    Less net debt
    CNY -6.9bn
    Equity value
    CNY 128.3bn

    Spread between methods: 4%.

    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%
    5.66%10.0210.7411.6812.9814.87
    6.66%8.168.549.029.6110.40
    7.66%6.917.127.387.698.07
    8.66%6.006.136.286.456.65
    9.66%5.325.405.485.585.68

    Outlined: this model. Green text: above today's price of 4.67. 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 year6.9%-4.0%-10.9pp
    EBIT margin22.0%13.5%-8.5pp
    Discount rate7.7%11.1%+3.4pp
    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.