DCF Studio

    2020.HK · HKG · Consumer Cyclical

    ANTA Sports Products Limited

    Also onConsensus Drift

    Implied value per share

    HKD 184.38

    Market price

    HKD 71.70

    Implied upside

    +157.2%

    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 3.44% of revenue against depreciation of 7.77%. A business cannot depreciate more than it invests indefinitely. Capex has been set to 7.77% of revenue so the forecast is not handed free growth. Override it if the reported figure is right.
    NoteRisk-free rate is an assumption: HKD assumption - no free live source available for this market.

    Value Per Share

    Perpetuity growth
    HKD 184.38+157.2%
    Exit multiple
    HKD 144.07+100.9%
    Market price
    HKD 71.70

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (CNY). Outflows negative.

    0bn14bn27bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayCNY
    LineFY26FY27FY28FY29FY30CAGR
    RevenueCNY 91.7bnCNY 104.9bnCNY 119.9bnCNY 137.2bnCNY 156.8bn+14.3%
    EBITCNY 21.0bnCNY 24.0bnCNY 27.4bnCNY 31.4bnCNY 35.9bn+14.3%
    NOPATCNY 17.5bnCNY 20.0bnCNY 22.9bnCNY 26.2bnCNY 30.0bn+14.3%
    Add depreciation & amortisationCNY 7.3bnCNY 8.4bnCNY 9.6bnCNY 11.0bnCNY 12.5bn+14.3%
    Less capital expenditureCNY -7.1bnCNY -8.2bnCNY -9.3bnCNY -10.7bnCNY -12.2bn+14.3%
    Less increase in working capitalCNY -1.7bnCNY -1.9bnCNY -2.2bnCNY -2.5bnCNY -2.9bn+14.3%
    Free cashflow to firmCNY 16.0bnCNY 18.3bnCNY 21.0bnCNY 24.0bnCNY 27.4bn+14.3%
    Discount factor0.96330.89390.82950.76980.7143-
    Present valueCNY 15.5bnCNY 16.4bnCNY 17.4bnCNY 18.5bnCNY 19.6bn+6.1%
    Present Value Of The ForecastCNY 87.3bn

    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
    Beta0.768Reported 0.654, pulled toward 1.0 (Blume)
    Cost of equity8.58%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 198.6bn86.2% of capital
    Total debtCNY 31.8bn13.8% of capital, book value as a proxy
    Tax rate16.5%Effective, capped at statutory
    WACC7.76%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 157.48

    81% of EV

    Forecast FCFF, final year
    CNY 27.4bn
    Capex at depreciation, working capital in reinvestment
    CNY 30.2bn
    Less reinvestment at g/ROIC (13.6% of NOPAT)
    CNY -4.1bn
    Capitalised
    CNY 26.1bn
    ROIC (reported)
    18.4%
    Terminal value, undiscounted
    CNY 508.8bn
    Terminal value, discounted
    CNY 363.4bn
    Enterprise value
    CNY 450.7bn
    Less net debt
    CNY -6.6bn
    Equity value
    CNY 457.3bn

    Exit at 7.6x EBITDA

    Value per shareCNY 123.05

    75% of EV

    Terminal value, undiscounted
    CNY 368.8bn
    Terminal value, discounted
    CNY 263.4bn
    Enterprise value
    CNY 350.7bn
    Less net debt
    CNY -6.6bn
    Equity value
    CNY 357.3bn

    Spread between methods: 25%.

    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%
    5.76%210.79229.32253.46286.25333.43
    6.76%170.46181.10194.20210.72232.24
    7.76%143.03149.65157.48166.91178.51
    8.76%123.19127.51132.50138.32145.20
    9.76%108.17111.10114.41118.18122.53

    Outlined: this model. Green text: above today's price of 61.24. 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 year14.3%-8.8%-23.1pp
    EBIT margin22.9%8.8%-14.0pp
    Discount rate7.8%16.2%+8.5pp
    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.