DCF Studio

    1211.HK · HKG · Consumer Cyclical

    BYD Company Limited

    Also onConsensus Drift

    Implied value per share

    HKD 246.99

    Market price

    HKD 81.50

    Implied upside

    +203.1%

    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.
    AdjustedFree cashflow is negative in at least one forecast year, so terminal value carries most of the valuation.
    AdjustedCapital expenditure runs at 18.8% of revenue against depreciation of 7.5%. 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 246.99+203.1%
    Exit multiple
    HKD 154.55+89.6%
    Market price
    HKD 81.50

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (CNY). Outflows negative.

    -100966037686-504830188430FY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayCNY
    LineFY26FY27FY28FY29FY30CAGR
    RevenueCNY 995.0bnCNY 1231.5bnCNY 1524.2bnCNY 1886.5bnCNY 2334.8bn+23.8%
    EBITCNY 58.7bnCNY 72.6bnCNY 89.9bnCNY 111.3bnCNY 137.7bn+23.8%
    NOPATCNY 49.3bnCNY 61.1bnCNY 75.6bnCNY 93.5bnCNY 115.8bn+23.8%
    Add depreciation & amortisationCNY 74.9bnCNY 92.7bnCNY 114.8bnCNY 142.0bnCNY 175.8bn+23.8%
    Less capital expenditureCNY -187.3bnCNY -231.8bnCNY -286.9bnCNY -355.1bnCNY -439.4bn+23.8%
    Less increase in working capitalCNY 20.0bnCNY 24.7bnCNY 30.6bnCNY 37.9bnCNY 46.9bn-23.8%
    Free cashflow to firmCNY -43.0bnCNY -53.3bnCNY -65.9bnCNY -81.6bnCNY -101.0bn-23.8%
    Discount factor0.96930.91060.85550.80370.7551-
    Present valueCNY -41.7bnCNY -48.5bnCNY -56.4bnCNY -65.6bnCNY -76.2bn-16.3%
    Present Value Of The ForecastCNY -288.4bn

    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
    Beta0.549Reported 0.327, pulled toward 1.0 (Blume)
    Cost of equity7.04%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 743.1bn86.2% of capital
    Total debtCNY 119.1bn13.8% of capital, book value as a proxy
    Tax rate15.9%Effective, capped at statutory
    WACC6.44%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 210.96

    115% of EV

    Forecast FCFF, final year
    CNY -101.0bn
    Capex at depreciation, working capital in reinvestment
    CNY 130.9bn
    Less reinvestment at g/ROIC (14.4% of NOPAT)
    CNY -18.9bn
    Capitalised
    CNY 112.0bn
    ROIC (reported)
    17.4%
    Terminal value, undiscounted
    CNY 2913.2bn
    Terminal value, discounted
    CNY 2199.7bn
    Enterprise value
    CNY 1911.3bn
    Less net debt
    CNY -10.8bn
    Equity value
    CNY 1922.1bn

    Exit at 6.3x EBITDA

    Value per shareCNY 132.01

    124% of EV

    Terminal value, undiscounted
    CNY 1960.5bn
    Terminal value, discounted
    CNY 1480.3bn
    Enterprise value
    CNY 1191.9bn
    Less net debt
    CNY -10.8bn
    Equity value
    CNY 1202.8bn

    Spread between methods: 46%.

    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%
    4.44%340.16404.39501.51665.741003.94
    5.44%234.92265.43306.20363.53450.21
    6.44%173.07189.92210.96238.02274.18
    7.44%132.66142.83154.99169.82188.35
    8.44%104.39110.89118.43127.30137.92

    Outlined: this model. Green text: above today's price of 69.61. 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 year23.8%2.3%-21.5pp
    EBIT margin5.9%2.6%-3.3pp
    Discount rate6.4%10.7%+4.3pp
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    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.