DCF Studio

    2057.HK · HKG · Industrials

    ZTO Express (Cayman) Inc.

    Also onConsensus Drift

    Implied value per share

    HKD 664.93

    Market price

    HKD 163.00

    Implied upside

    +307.9%

    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.
    AdjustedBeta of -0.235 is not usable in a cost of equity. Clamped to 0.30.
    AdjustedCapital expenditure runs at 16.0% of revenue against depreciation of 7.2%. 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 664.93+307.9%
    Exit multiple
    HKD 301.39+84.9%
    Market price
    HKD 163.00

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (CNY). Outflows negative.

    0bn4bn9bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayCNY
    LineFY26FY27FY28FY29FY30CAGR
    RevenueCNY 54.8bnCNY 61.1bnCNY 68.1bnCNY 76.0bnCNY 84.8bn+11.5%
    EBITCNY 13.1bnCNY 14.6bnCNY 16.3bnCNY 18.2bnCNY 20.3bn+11.5%
    NOPATCNY 11.0bnCNY 12.2bnCNY 13.6bnCNY 15.2bnCNY 17.0bn+11.5%
    Add depreciation & amortisationCNY 3.9bnCNY 4.4bnCNY 4.9bnCNY 5.5bnCNY 6.1bn+11.5%
    Less capital expenditureCNY -8.8bnCNY -9.8bnCNY -10.9bnCNY -12.2bnCNY -13.6bn+11.5%
    Less increase in working capitalCNY -452.9mCNY -505.1mCNY -563.5mCNY -628.5mCNY -701.1m+11.5%
    Free cashflow to firmCNY 5.7bnCNY 6.3bnCNY 7.1bnCNY 7.9bnCNY 8.8bn+11.5%
    Discount factor0.97550.92840.88360.84090.8003-
    Present valueCNY 5.5bnCNY 5.9bnCNY 6.2bnCNY 6.6bnCNY 7.0bn+6.2%
    Present Value Of The ForecastCNY 31.3bn

    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
    Beta0.300Clamped from a reported -0.235
    Cost of equity5.30%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 122.9bn91.5% of capital
    Total debtCNY 11.5bn8.5% of capital, book value as a proxy
    Tax rate16.5%Effective, capped at statutory
    WACC5.08%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 567.93

    93% of EV

    Forecast FCFF, final year
    CNY 8.8bn
    Capex at depreciation, working capital in reinvestment
    CNY 17.0bn
    Less reinvestment at g/ROIC (22.2% of NOPAT)
    CNY -3.8bn
    Capitalised
    CNY 13.2bn
    ROIC (reported)
    11.2%
    Terminal value, undiscounted
    CNY 525.7bn
    Terminal value, discounted
    CNY 420.7bn
    Enterprise value
    CNY 452.0bn
    Less net debt
    CNY -14.2bn
    Equity value
    CNY 466.2bn

    Exit at 7.8x EBITDA

    Value per shareCNY 257.42

    84% of EV

    Terminal value, undiscounted
    CNY 207.2bn
    Terminal value, discounted
    CNY 165.8bn
    Enterprise value
    CNY 197.1bn
    Less net debt
    CNY -14.2bn
    Equity value
    CNY 211.3bn

    Spread between methods: 75%.

    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%
    3.08%1065.411465.192558.2518118.31—
    4.08%646.78754.86931.041270.332197.84
    5.08%462.77506.92567.92657.96804.69
    6.08%359.52380.98408.24444.14493.70
    7.08%293.56304.91318.60335.47356.88

    Outlined: this model. Green text: above today's price of 139.22. 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 year11.5%-19.2%-30.7pp
    EBIT margin24.0%6.4%-17.5pp
    Discount rate5.1%13.3%+8.3pp
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    Yahoo Finance and RBA data. General information, not advice. Methodology.