DCF Studio

    6690.HK · HKG · Consumer Cyclical

    Haier Smart Home Co., Ltd.

    Also onConsensus Drift

    Implied value per share

    HKD 57.83

    Market price

    HKD 20.58

    Implied upside

    +181.0%

    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 3.4% of revenue against depreciation of 2.6%. 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 57.83+181.0%
    Exit multiple
    HKD 31.84+54.7%
    Market price
    HKD 20.58

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (CNY). Outflows negative.

    0bn8bn16bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayCNY
    LineFY26FY27FY28FY29FY30CAGR
    RevenueCNY 324.9bnCNY 349.2bnCNY 375.3bnCNY 403.3bnCNY 433.5bn+7.5%
    EBITCNY 25.0bnCNY 26.9bnCNY 28.9bnCNY 31.1bnCNY 33.4bn+7.5%
    NOPATCNY 21.3bnCNY 22.9bnCNY 24.7bnCNY 26.5bnCNY 28.5bn+7.5%
    Add depreciation & amortisationCNY 8.4bnCNY 9.1bnCNY 9.8bnCNY 10.5bnCNY 11.3bn+7.5%
    Less capital expenditureCNY -11.1bnCNY -11.9bnCNY -12.8bnCNY -13.8bnCNY -14.8bn+7.5%
    Less increase in working capitalCNY -7.0bnCNY -7.5bnCNY -8.1bnCNY -8.7bnCNY -9.3bn+7.5%
    Free cashflow to firmCNY 11.7bnCNY 12.6bnCNY 13.5bnCNY 14.5bnCNY 15.6bn+7.5%
    Discount factor0.96610.90180.84170.78570.7333-
    Present valueCNY 11.3bnCNY 11.3bnCNY 11.4bnCNY 11.4bnCNY 11.4bn+0.3%
    Present Value Of The ForecastCNY 56.8bn

    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
    Beta0.631Reported 0.450, pulled toward 1.0 (Blume)
    Cost of equity7.62%Risk-free + beta x equity risk premium
    Cost of debt5.97%Interest expense / average total debt
    Market capitalisationCNY 191.5bn80.9% of capital
    Total debtCNY 45.3bn19.1% of capital, book value as a proxy
    Tax rate14.8%Effective, capped at statutory
    WACC7.14%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 49.39

    88% of EV

    Forecast FCFF, final year
    CNY 15.6bn
    Capex at depreciation, working capital in reinvestment
    CNY 30.2bn
    Less reinvestment at g/ROIC (18.6% of NOPAT)
    CNY -5.6bn
    Capitalised
    CNY 24.6bn
    ROIC (reported)
    13.5%
    Terminal value, undiscounted
    CNY 543.8bn
    Terminal value, discounted
    CNY 398.8bn
    Enterprise value
    CNY 455.5bn
    Less net debt
    CNY -4.3bn
    Equity value
    CNY 459.9bn

    Exit at 5.9x EBITDA

    Value per shareCNY 27.19

    77% of EV

    Terminal value, undiscounted
    CNY 261.9bn
    Terminal value, discounted
    CNY 192.1bn
    Enterprise value
    CNY 248.8bn
    Less net debt
    CNY -4.3bn
    Equity value
    CNY 253.2bn

    Spread between methods: 58%.

    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%
    5.14%71.1078.5888.86103.91128.11
    6.14%54.9958.8263.6770.0578.81
    7.14%44.6346.7949.3952.6056.67
    8.14%37.4338.7140.2141.9844.11
    9.14%32.1432.9333.8234.8436.03

    Outlined: this model. Green text: above today's price of 17.58. 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 year7.5%-26.1%-33.6pp
    EBIT margin7.7%2.9%-4.8pp
    Discount rate7.1%14.9%+7.7pp
    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.