DCF Studio

    2388.HK · HKG · Financial Services

    BOC Hong Kong (Holdings) Limited

    Also onConsensus Drift

    Implied value per share

    HKD 224.47

    Market price

    HKD 52.05

    Implied upside

    +331.3%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case

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

    No usable EV/EBITDA (EBITDA is not positive), so the exit multiple falls back to 8x.

    Value Per Share

    Perpetuity growth
    HKD 224.47+331.3%
    Exit multiple
    HKD 156.18+200.1%
    Market price
    HKD 52.05

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (HKD). Outflows negative.

    0bn39bn78bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayHKD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueHKD 105.7bnHKD 125.5bnHKD 149.2bnHKD 177.3bnHKD 210.6bn+18.8%
    EBITHKD 63.7bnHKD 75.6bnHKD 89.9bnHKD 106.8bnHKD 126.9bn+18.8%
    NOPATHKD 53.6bnHKD 63.7bnHKD 75.7bnHKD 90.0bnHKD 106.9bn+18.8%
    Add depreciation & amortisationHKD 4.5bnHKD 5.3bnHKD 6.3bnHKD 7.5bnHKD 8.9bn+18.8%
    Less capital expenditureHKD -2.4bnHKD -2.8bnHKD -3.3bnHKD -4.0bnHKD -4.7bn+18.8%
    Less increase in working capitalHKD -16.7bnHKD -19.9bnHKD -23.6bnHKD -28.1bnHKD -33.4bn+18.8%
    Free cashflow to firmHKD 39.0bnHKD 46.3bnHKD 55.0bnHKD 65.4bnHKD 77.7bn+18.8%
    Discount factor0.96960.91160.85700.80570.7575-
    Present valueHKD 37.8bnHKD 42.2bnHKD 47.2bnHKD 52.7bnHKD 58.9bn+11.7%
    Present Value Of The ForecastHKD 238.8bn

    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
    Beta0.498Reported 0.251, pulled toward 1.0 (Blume)
    Cost of equity6.69%Risk-free + beta x equity risk premium
    Cost of debt5.20%Implied cost of debt of 80.6% is not a credible funding cost, so risk-free + 2bp is assumed instead. Interest expense and reported debt are measuring different things - common for banks, whose interest expense includes deposits that total debt excludes.
    Market capitalisationHKD 550.3bn86.1% of capital
    Total debtHKD 88.6bn13.9% of capital, book value as a proxy
    Tax rate15.8%Effective, capped at statutory
    WACC6.37%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 shareHKD 224.47

    87% of EV

    Forecast FCFF, final year
    HKD 77.7bn
    Capex at depreciation, working capital in reinvestment
    HKD 106.9bn
    Less reinvestment at g/ROIC (28.0% of NOPAT)
    HKD -29.9bn
    Capitalised
    HKD 77.0bn
    ROIC (reported)
    8.9%
    Terminal value, undiscounted
    HKD 2039.7bn
    Terminal value, discounted
    HKD 1545.0bn
    Enterprise value
    HKD 1783.8bn
    Less net debt
    HKD -589.5bn
    Equity value
    HKD 2373.3bn

    Exit at 8.0x EBITDA

    Value per shareHKD 156.18

    78% of EV

    Terminal value, undiscounted
    HKD 1086.5bn
    Terminal value, discounted
    HKD 823.0bn
    Enterprise value
    HKD 1061.8bn
    Less net debt
    HKD -589.5bn
    Equity value
    HKD 1651.3bn

    Spread between methods: 36%.

    Sensitivity

    Value per share (HKD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    4.37%325.21358.43409.20496.76684.75
    5.37%253.42266.76284.59309.77348.20
    6.37%211.21217.13224.48233.87246.40
    7.37%183.45186.05189.10192.75197.24
    8.37%163.83164.77165.81166.96168.27

    Outlined: this model. Green text: above today's price of 52.05. 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
    EBIT margin60.3%1.6%-58.6pp
    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.