DCF Studio

    2688.HK · HKG · Utilities

    ENN Energy Holdings Limited

    Also onConsensus Drift

    Implied value per share

    HKD 112.67

    Market price

    HKD 49.68

    Implied upside

    +126.8%

    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.
    AdjustedCapital expenditure runs at 6.2% of revenue against depreciation of 2.7%. 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 112.67+126.8%
    Exit multiple
    HKD 59.88+20.5%
    Market price
    HKD 49.68

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (CNY). Outflows negative.

    0bn2bn4bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayCNY
    LineFY26FY27FY28FY29FY30CAGR
    RevenueCNY 112.5bnCNY 113.2bnCNY 113.8bnCNY 114.4bnCNY 115.1bn+0.6%
    EBITCNY 9.4bnCNY 9.4bnCNY 9.5bnCNY 9.5bnCNY 9.6bn+0.6%
    NOPATCNY 7.8bnCNY 7.9bnCNY 7.9bnCNY 8.0bnCNY 8.0bn+0.6%
    Add depreciation & amortisationCNY 3.0bnCNY 3.1bnCNY 3.1bnCNY 3.1bnCNY 3.1bn+0.6%
    Less capital expenditureCNY -7.0bnCNY -7.0bnCNY -7.1bnCNY -7.1bnCNY -7.2bn+0.6%
    Less increase in working capitalCNY -66.2mCNY -66.5mCNY -66.9mCNY -67.3mCNY -67.6m+0.6%
    Free cashflow to firmCNY 3.8bnCNY 3.8bnCNY 3.8bnCNY 3.9bnCNY 3.9bn+0.6%
    Discount factor0.96580.90100.84050.78400.7314-
    Present valueCNY 3.7bnCNY 3.4bnCNY 3.2bnCNY 3.0bnCNY 2.8bn-6.2%
    Present Value Of The ForecastCNY 16.2bn

    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
    Beta0.802Reported 0.705, pulled toward 1.0 (Blume)
    Cost of equity8.82%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 55.2bn73.7% of capital
    Total debtCNY 19.7bn26.3% of capital, book value as a proxy
    Tax rate16.5%Effective, capped at statutory
    WACC7.20%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 96.23

    86% of EV

    Forecast FCFF, final year
    CNY 3.9bn
    Capex at depreciation, working capital in reinvestment
    CNY 8.2bn
    Less reinvestment at g/ROIC (21.4% of NOPAT)
    CNY -1.7bn
    Capitalised
    CNY 6.4bn
    ROIC (reported)
    11.7%
    Terminal value, undiscounted
    CNY 140.1bn
    Terminal value, discounted
    CNY 102.4bn
    Enterprise value
    CNY 118.7bn
    Less net debt
    CNY 11.7bn
    Equity value
    CNY 107.0bn

    Exit at 5.6x EBITDA

    Value per shareCNY 51.14

    76% of EV

    Terminal value, undiscounted
    CNY 71.5bn
    Terminal value, discounted
    CNY 52.3bn
    Enterprise value
    CNY 68.5bn
    Less net debt
    CNY 11.7bn
    Equity value
    CNY 56.9bn

    Spread between methods: 61%.

    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%
    5.20%144.65159.33179.37208.40254.37
    6.20%109.95117.27126.51138.56155.00
    7.20%87.5191.4796.23102.07109.42
    8.20%71.8374.0676.6479.6783.30
    9.20%60.2961.5462.9464.5466.38

    Outlined: this model. Green text: above today's price of 42.43. 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 year0.6%-15.6%-16.1pp
    EBIT margin8.3%4.6%-3.7pp
    Discount rate7.2%11.6%+4.4pp
    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.