DCF Studio

    2313.HK · HKG · Consumer Cyclical

    Shenzhou International Group Holdings Limited

    Also onConsensus Drift

    Implied value per share

    HKD 62.32

    Market price

    HKD 35.04

    Implied upside

    +77.8%

    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.
    NoteRisk-free rate is an assumption: HKD assumption - no free live source available for this market.

    Value Per Share

    Perpetuity growth
    HKD 62.32+77.8%
    Exit multiple
    HKD 49.38+40.9%
    Market price
    HKD 35.04

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (CNY). Outflows negative.

    0bn3bn5bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayCNY
    LineFY26FY27FY28FY29FY30CAGR
    RevenueCNY 32.1bnCNY 33.3bnCNY 34.6bnCNY 35.9bnCNY 37.2bn+3.7%
    EBITCNY 5.8bnCNY 6.1bnCNY 6.3bnCNY 6.5bnCNY 6.8bn+3.7%
    NOPATCNY 5.1bnCNY 5.3bnCNY 5.5bnCNY 5.7bnCNY 5.9bn+3.7%
    Add depreciation & amortisationCNY 1.7bnCNY 1.8bnCNY 1.8bnCNY 1.9bnCNY 2.0bn+3.7%
    Less capital expenditureCNY -2.0bnCNY -2.1bnCNY -2.2bnCNY -2.3bnCNY -2.4bn+3.7%
    Less increase in working capitalCNY -250.1mCNY -259.4mCNY -269.1mCNY -279.0mCNY -289.4m+3.7%
    Free cashflow to firmCNY 4.5bnCNY 4.7bnCNY 4.8bnCNY 5.0bnCNY 5.2bn+3.7%
    Discount factor0.95800.87910.80670.74030.6794-
    Present valueCNY 4.3bnCNY 4.1bnCNY 3.9bnCNY 3.7bnCNY 3.5bn-4.8%
    Present Value Of The ForecastCNY 19.6bn

    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
    Beta1.074Reported 1.110, pulled toward 1.0 (Blume)
    Cost of equity10.72%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 52.7bn78.0% of capital
    Total debtCNY 14.9bn22.0% of capital, book value as a proxy
    Tax rate12.7%Effective, capped at statutory
    WACC8.97%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 53.22

    71% of EV

    Forecast FCFF, final year
    CNY 5.2bn
    Capex at depreciation, working capital in reinvestment
    CNY 5.9bn
    Less reinvestment at g/ROIC (25.9% of NOPAT)
    CNY -1.5bn
    Capitalised
    CNY 4.4bn
    ROIC (reported)
    9.6%
    Terminal value, undiscounted
    CNY 69.5bn
    Terminal value, discounted
    CNY 47.2bn
    Enterprise value
    CNY 66.8bn
    Less net debt
    CNY -13.2bn
    Equity value
    CNY 80.0bn

    Exit at 5.2x EBITDA

    Value per shareCNY 42.17

    61% of EV

    Terminal value, undiscounted
    CNY 45.1bn
    Terminal value, discounted
    CNY 30.6bn
    Enterprise value
    CNY 50.2bn
    Less net debt
    CNY -13.2bn
    Equity value
    CNY 63.4bn

    Spread between methods: 23%.

    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%
    6.97%68.0069.7471.8374.4277.70
    7.97%59.0759.8960.8461.9463.27
    8.97%52.5252.8653.2253.6354.08
    9.97%47.6847.8147.9448.0648.19
    10.97%44.0744.1944.3044.4144.52

    Outlined: this model. Green text: above today's price of 29.93. 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 year3.7%-15.7%-19.4pp
    EBIT margin18.2%9.0%-9.2pp
    Discount rate9.0%18.3%+9.3pp
    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.