DCF Studio

    2318.HK · HKG · Financial Services

    Ping An Insurance (Group) Company of China, Ltd.

    Also onConsensus Drift

    Implied value per share

    HKD 307.60

    Market price

    HKD 53.20

    Implied upside

    +478.2%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case · CNY model at 1.1708

    Wrong toolThis is a financial. Banks and insurers report no meaningful operating income, and capex and working capital do not mean what a free-cashflow model assumes, so a DCF will misprice it. The model below runs on best-effort numbers - treat it as an illustration, not a valuation.
    AdjustedReports in CNY, trades in HKD. Modelled in CNY, converted at the end.
    AdjustedReported capital expenditure averages just 0.94% of revenue, which is too low to be the company's real investment - property trusts and similar structures invest through lines that are not reported as capex. Capex has been set to 1.80% 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 307.60+478.2%
    Exit multiple
    HKD 137.88+159.2%
    Market price
    HKD 53.20

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (CNY). Outflows negative.

    0bn145bn290bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayCNY
    LineFY26FY27FY28FY29FY30CAGR
    RevenueCNY 990.0bnCNY 1056.4bnCNY 1127.1bnCNY 1202.6bnCNY 1283.2bn+6.7%
    EBITCNY 178.7bnCNY 190.7bnCNY 203.5bnCNY 217.1bnCNY 231.6bn+6.7%
    NOPATCNY 158.2bnCNY 168.8bnCNY 180.1bnCNY 192.2bnCNY 205.1bn+6.7%
    Add depreciation & amortisationCNY 21.2bnCNY 22.6bnCNY 24.1bnCNY 25.7bnCNY 27.4bn+6.7%
    Less capital expenditureCNY -17.8bnCNY -19.0bnCNY -20.3bnCNY -21.6bnCNY -23.1bn+6.7%
    Less increase in working capitalCNY 62.2bnCNY 66.3bnCNY 70.8bnCNY 75.5bnCNY 80.6bn-6.7%
    Free cashflow to firmCNY 223.7bnCNY 238.7bnCNY 254.7bnCNY 271.8bnCNY 290.0bn+6.7%
    Discount factor0.97610.92990.88590.84400.8041-
    Present valueCNY 218.4bnCNY 222.0bnCNY 225.6bnCNY 229.4bnCNY 233.1bn+1.7%
    Present Value Of The ForecastCNY 1128.5bn

    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
    Beta0.707Reported 0.563, pulled toward 1.0 (Blume)
    Cost of equity8.15%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 963.3bn40.1% of capital
    Total debtCNY 1438.5bn59.9% of capital, book value as a proxy
    Tax rate11.5%Effective, capped at statutory
    WACC4.97%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 262.72

    78% of EV

    Forecast FCFF, final year
    CNY 290.0bn
    Capex at depreciation, working capital in reinvestment
    CNY 208.9bn
    Less reinvestment at g/ROIC (42.0% of NOPAT)
    CNY -87.7bn
    Capitalised
    CNY 121.2bn
    ROIC (reported)
    6.0%
    Terminal value, undiscounted
    CNY 5037.8bn
    Terminal value, discounted
    CNY 4050.7bn
    Enterprise value
    CNY 5179.2bn
    Less net debt
    CNY 419.8bn
    Equity value
    CNY 4759.3bn

    Exit at 6.8x EBITDA

    Value per shareCNY 117.76

    56% of EV

    Terminal value, undiscounted
    CNY 1771.8bn
    Terminal value, discounted
    CNY 1424.7bn
    Enterprise value
    CNY 2553.1bn
    Less net debt
    CNY 419.8bn
    Equity value
    CNY 2133.3bn

    Spread between methods: 76%.

    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%
    2.97%566.08751.561333.65——
    3.97%338.76374.25433.39552.95927.60
    4.97%242.27250.90262.72280.16308.97
    5.97%188.82189.56190.31191.05191.80
    6.97%160.34160.96161.57162.18162.79

    Outlined: this model. Green text: above today's price of 45.44. 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 year6.7%-15.2%-21.9pp
    EBIT margin18.1%3.2%-14.9pp
    Discount rate5.0%20.9%+15.9pp
    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.