DCF Studio

    2269.HK · HKG · Healthcare

    WuXi Biologics (Cayman) Inc.

    Also onConsensus Drift

    Implied value per share

    HKD 28.38

    Market price

    HKD 50.35

    Implied upside

    -43.6%

    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 25.4% of revenue against depreciation of 6.6%. 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.

    Current EV/EBITDA of 22.9x sits outside a defensible 3-20x band, so the exit multiple is capped at 20.0x. A multiple that far out usually means EBITDA is the wrong denominator for this business.

    Value Per Share

    Perpetuity growth
    HKD 28.38-43.6%
    Exit multiple
    HKD 58.59+16.4%
    Market price
    HKD 50.35

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (CNY). Outflows negative.

    -36473579-182367890FY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayCNY
    LineFY26FY27FY28FY29FY30CAGR
    RevenueCNY 24.5bnCNY 27.6bnCNY 31.1bnCNY 35.0bnCNY 39.4bn+12.6%
    EBITCNY 7.1bnCNY 8.0bnCNY 9.1bnCNY 10.2bnCNY 11.5bn+12.6%
    NOPATCNY 6.0bnCNY 6.7bnCNY 7.6bnCNY 8.5bnCNY 9.6bn+12.6%
    Add depreciation & amortisationCNY 1.6bnCNY 1.8bnCNY 2.1bnCNY 2.3bnCNY 2.6bn+12.6%
    Less capital expenditureCNY -6.2bnCNY -7.0bnCNY -7.9bnCNY -8.9bnCNY -10.0bn+12.6%
    Less increase in working capitalCNY -1.4bnCNY -1.6bnCNY -1.8bnCNY -2.0bnCNY -2.2bn+12.6%
    Free cashflow to firmCNY -22.7mCNY -25.6mCNY -28.8mCNY -32.4mCNY -36.5m-12.6%
    Discount factor0.96070.88660.81830.75520.6970-
    Present valueCNY -21.8mCNY -22.7mCNY -23.5mCNY -24.5mCNY -25.4m-3.9%
    Present Value Of The ForecastCNY -117.9m

    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
    Beta0.747Reported 0.623, pulled toward 1.0 (Blume)
    Cost of equity8.43%Risk-free + beta x equity risk premium
    Cost of debt3.56%Interest expense / average total debt
    Market capitalisationCNY 207.2bn98.5% of capital
    Total debtCNY 3.1bn1.5% of capital, book value as a proxy
    Tax rate16.5%Effective, capped at statutory
    WACC8.35%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 24.24

    100% of EV

    Forecast FCFF, final year
    CNY -36.5m
    Capex at depreciation, working capital in reinvestment
    CNY 9.7bn
    Less reinvestment at g/ROIC (25.1% of NOPAT)
    CNY -2.4bn
    Capitalised
    CNY 7.3bn
    ROIC (reported)
    10.0%
    Terminal value, undiscounted
    CNY 127.3bn
    Terminal value, discounted
    CNY 88.7bn
    Enterprise value
    CNY 88.6bn
    Less net debt
    CNY -12.6bn
    Equity value
    CNY 101.2bn

    Exit at 20.0x EBITDA

    Value per shareCNY 50.05

    100% of EV

    Terminal value, undiscounted
    CNY 281.9bn
    Terminal value, discounted
    CNY 196.5bn
    Enterprise value
    CNY 196.4bn
    Less net debt
    CNY -12.6bn
    Equity value
    CNY 209.0bn

    Spread between methods: 69%.

    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%
    6.35%34.2835.9838.1040.8144.46
    7.35%27.8728.7129.7130.9232.43
    8.35%23.3723.7824.2424.7825.41
    9.35%20.0620.2220.4120.6020.82
    10.35%17.6217.6917.7617.8317.91

    Outlined: this model. Green text: above today's price of 43.00. 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 year12.6%29.5%+17.0pp
    EBIT margin29.1%48.4%+19.2pp
    Discount rate8.4%5.9%-2.4pp
    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.