DCF Studio

    2382.HK · HKG · Technology

    Sunny Optical Technology (Group) Company Limited

    Also onConsensus Drift

    Implied value per share

    HKD 52.92

    Market price

    HKD 67.05

    Implied upside

    -21.1%

    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.
    AdjustedCapital expenditure runs at 7.5% of revenue against depreciation of 5.9%. 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 52.92-21.1%
    Exit multiple
    HKD 77.93+16.2%
    Market price
    HKD 67.05

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (CNY). Outflows negative.

    0bn1bn2bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayCNY
    LineFY26FY27FY28FY29FY30CAGR
    RevenueCNY 47.2bnCNY 51.6bnCNY 56.3bnCNY 61.5bnCNY 67.1bn+9.2%
    EBITCNY 3.1bnCNY 3.4bnCNY 3.7bnCNY 4.0bnCNY 4.4bn+9.2%
    NOPATCNY 2.7bnCNY 3.0bnCNY 3.3bnCNY 3.6bnCNY 3.9bn+9.2%
    Add depreciation & amortisationCNY 2.8bnCNY 3.1bnCNY 3.3bnCNY 3.6bnCNY 4.0bn+9.2%
    Less capital expenditureCNY -3.5bnCNY -3.9bnCNY -4.2bnCNY -4.6bnCNY -5.0bn+9.2%
    Less increase in working capitalCNY -338.0mCNY -369.1mCNY -403.0mCNY -440.1mCNY -480.6m+9.2%
    Free cashflow to firmCNY 1.7bnCNY 1.8bnCNY 2.0bnCNY 2.2bnCNY 2.4bn+9.2%
    Discount factor0.95120.86070.77880.70470.6376-
    Present valueCNY 1.6bnCNY 1.6bnCNY 1.5bnCNY 1.5bnCNY 1.5bn-1.2%
    Present Value Of The ForecastCNY 7.7bn

    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
    Beta1.098Reported 1.147, pulled toward 1.0 (Blume)
    Cost of equity10.89%Risk-free + beta x equity risk premium
    Cost of debt7.04%Interest expense / average total debt
    Market capitalisationCNY 72.0bn92.0% of capital
    Total debtCNY 6.2bn8.0% of capital, book value as a proxy
    Tax rate11.5%Effective, capped at statutory
    WACC10.52%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 45.20

    76% of EV

    Forecast FCFF, final year
    CNY 2.4bn
    Capex at depreciation, working capital in reinvestment
    CNY 4.0bn
    Less reinvestment at g/ROIC (23.8% of NOPAT)
    CNY -947.8m
    Capitalised
    CNY 3.0bn
    ROIC (WACC floor)
    10.5%
    Terminal value, undiscounted
    CNY 38.9bn
    Terminal value, discounted
    CNY 24.8bn
    Enterprise value
    CNY 32.5bn
    Less net debt
    CNY -16.8bn
    Equity value
    CNY 49.3bn

    Exit at 9.0x EBITDA

    Value per shareCNY 66.56

    86% of EV

    Terminal value, undiscounted
    CNY 75.4bn
    Terminal value, discounted
    CNY 48.1bn
    Enterprise value
    CNY 55.8bn
    Less net debt
    CNY -16.8bn
    Equity value
    CNY 72.6bn

    Spread between methods: 38%.

    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%
    8.52%52.9753.1253.2753.4253.57
    9.52%48.5448.6748.8048.9249.05
    10.52%44.9845.0945.2045.3145.42
    11.52%42.0542.1542.2542.3442.44
    12.52%39.6139.6939.7839.8739.95

    Outlined: this model. Green text: above today's price of 57.27. 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 year9.2%18.6%+9.4pp
    EBIT margin6.5%8.9%+2.3pp
    Discount rate10.5%7.8%-2.7pp
    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.