DCF Studio

    1928.HK · HKG · Consumer Cyclical

    Sands China Ltd.

    Also onConsensus Drift

    Implied value per share

    HKD -9.23

    Market price

    HKD 12.24

    Implied upside

    -175.4%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case · USD model at 7.8441

    Wrong toolThis line has no market capitalisation, which means it is not ordinary shares - typically a hybrid, preference line, note or unlisted stub. A discounted cashflow values a claim on the whole business, so applying it here attributes all of the group’s revenue to a security that has no such claim. Its value is its coupon and call schedule. Look up the ordinary line instead.
    AdjustedReports in USD, trades in HKD. Modelled in USD, converted at the end.
    AdjustedReported capital expenditure averages 9.16% of revenue against depreciation of 19.38%. A business cannot depreciate more than it invests indefinitely. Capex has been set to 19.38% of revenue so the forecast is not handed free growth. Override it if the reported figure is right.
    AdjustedFree cashflow is negative in at least one forecast year, so terminal value carries most of the valuation.
    NoteRisk-free rate is an assumption: HKD assumption - no free live source available for this market.

    No usable EV/EBITDA (EBITDA is not positive), so the exit multiple falls back to 8x.

    Value Per Share

    Perpetuity growth
    HKD -9.23-175.4%
    Exit multiple
    HKD 49.32+302.9%
    Market price
    HKD 12.24

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    -1719715351-8598576750FY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 11.2bnUSD 16.7bnUSD 25.1bnUSD 37.7bnUSD 56.5bn+50.0%
    EBITUSD -457.1mUSD -685.6mUSD -1.0bnUSD -1.5bnUSD -2.3bn-50.0%
    NOPATUSD -440.7mUSD -661.0mUSD -991.5mUSD -1.5bnUSD -2.2bn-50.0%
    Add depreciation & amortisationUSD 2.2bnUSD 3.4bnUSD 5.0bnUSD 7.6bnUSD 11.4bn+50.0%
    Less capital expenditureUSD -2.2bnUSD -3.2bnUSD -4.9bnUSD -7.3bnUSD -11.0bn+50.0%
    Less increase in working capitalUSD 20.5mUSD 30.8mUSD 46.1mUSD 69.2mUSD 103.8m-50.0%
    Free cashflow to firmUSD -339.7mUSD -509.5mUSD -764.3mUSD -1.1bnUSD -1.7bn-50.0%
    Discount factor0.98010.94160.90450.86890.8348-
    Present valueUSD -332.9mUSD -479.8mUSD -691.3mUSD -996.2mUSD -1.4bn-44.1%
    Present Value Of The ForecastUSD -3.9bn

    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
    Beta0.663Reported 0.497, pulled toward 1.0 (Blume)
    Cost of equity7.84%Risk-free + beta x equity risk premium
    Cost of debt4.25%Interest expense / average total debt
    Market capitalisationUSD 0.000.0% of capital
    Total debtUSD 7.1bn100.0% of capital, book value as a proxy
    Tax rate3.6%Effective, capped at statutory
    WACC4.10%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 shareUSD -1.18

    0% of EV

    Terminal value, undiscounted
    USD 0.00
    Terminal value, discounted
    USD 0.00
    Enterprise value
    USD -3.9bn
    Less net debt
    USD 5.6bn
    Equity value
    USD -9.5bn

    Exit at 8.0x EBITDA

    Value per shareUSD 6.29

    107% of EV

    Terminal value, undiscounted
    USD 72.4bn
    Terminal value, discounted
    USD 60.4bn
    Enterprise value
    USD 56.5bn
    Less net debt
    USD 5.6bn
    Equity value
    USD 50.9bn

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    2.10%-1.21-1.21———
    3.10%-1.19-1.19-1.19-1.19—
    4.10%-1.18-1.18-1.18-1.18-1.18
    5.10%-1.16-1.16-1.16-1.16-1.16
    6.10%-1.15-1.15-1.15-1.15-1.15

    Outlined: this model. Green text: above today's price of 1.56. 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 margin-4.1%-0.0%+4.1pp
    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.