DCF Studio

    2899.HK · HKG · Basic Materials

    Zijin Mining Group Company Limited

    Also onConsensus Drift

    Implied value per share

    HKD 28.18

    Market price

    HKD 34.14

    Implied upside

    -17.5%

    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 9.1% of revenue against depreciation of 3.7%. 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 28.18-17.5%
    Exit multiple
    HKD 33.25-2.6%
    Market price
    HKD 34.14

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (CNY). Outflows negative.

    0bn19bn38bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayCNY
    LineFY26FY27FY28FY29FY30CAGR
    RevenueCNY 380.1bnCNY 413.9bnCNY 450.8bnCNY 490.9bnCNY 534.5bn+8.9%
    EBITCNY 56.4bnCNY 61.4bnCNY 66.9bnCNY 72.8bnCNY 79.3bn+8.9%
    NOPATCNY 47.1bnCNY 51.3bnCNY 55.9bnCNY 60.8bnCNY 66.2bn+8.9%
    Add depreciation & amortisationCNY 14.2bnCNY 15.5bnCNY 16.9bnCNY 18.4bnCNY 20.0bn+8.9%
    Less capital expenditureCNY -34.8bnCNY -37.9bnCNY -41.2bnCNY -44.9bnCNY -48.9bn+8.9%
    Less increase in working capitalCNY 563.3mCNY 613.4mCNY 668.0mCNY 727.4mCNY 792.1m-8.9%
    Free cashflow to firmCNY 27.1bnCNY 29.5bnCNY 32.2bnCNY 35.0bnCNY 38.1bn+8.9%
    Discount factor0.95760.87810.80530.73850.6772-
    Present valueCNY 26.0bnCNY 25.9bnCNY 25.9bnCNY 25.9bnCNY 25.8bn-0.1%
    Present Value Of The ForecastCNY 129.5bn

    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
    Beta1.001Reported 1.001, pulled toward 1.0 (Blume)
    Cost of equity10.20%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 907.8bn84.7% of capital
    Total debtCNY 164.5bn15.3% of capital, book value as a proxy
    Tax rate16.5%Effective, capped at statutory
    WACC9.05%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 24.07

    83% of EV

    Forecast FCFF, final year
    CNY 38.1bn
    Capex at depreciation, working capital in reinvestment
    CNY 70.9bn
    Less reinvestment at g/ROIC (18.5% of NOPAT)
    CNY -13.1bn
    Capitalised
    CNY 57.7bn
    ROIC (reported)
    13.5%
    Terminal value, undiscounted
    CNY 903.6bn
    Terminal value, discounted
    CNY 611.9bn
    Enterprise value
    CNY 741.4bn
    Less net debt
    CNY 88.9bn
    Equity value
    CNY 652.4bn

    Exit at 10.8x EBITDA

    Value per shareCNY 28.40

    85% of EV

    Terminal value, undiscounted
    CNY 1077.0bn
    Terminal value, discounted
    CNY 729.3bn
    Enterprise value
    CNY 858.8bn
    Less net debt
    CNY 88.9bn
    Equity value
    CNY 769.9bn

    Spread between methods: 17%.

    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%
    7.05%33.0034.8337.0439.7843.27
    8.05%27.0328.1129.3730.8832.69
    9.05%22.6523.3124.0724.9325.95
    10.05%19.3219.7320.1820.6921.27
    11.05%16.7016.9517.2217.5217.85

    Outlined: this model. Green text: above today's price of 29.16. 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 year8.9%12.9%+4.0pp
    EBIT margin14.8%17.4%+2.6pp
    Discount rate9.0%8.1%-1.0pp
    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.