DCF Studio

    9618.HK · HKG · Consumer Cyclical

    JD.com, Inc.

    Also onConsensus Drift

    Implied value per share

    HKD 274.22

    Market price

    HKD 105.00

    Implied upside

    +161.2%

    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 1.6% of revenue against depreciation of 0.7%. 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 274.22+161.2%
    Exit multiple
    HKD 294.96+180.9%
    Market price
    HKD 105.00

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (CNY). Outflows negative.

    0bn13bn26bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayCNY
    LineFY26FY27FY28FY29FY30CAGR
    RevenueCNY 1410.6bnCNY 1520.1bnCNY 1638.0bnCNY 1765.0bnCNY 1901.9bn+7.8%
    EBITCNY 28.6bnCNY 30.8bnCNY 33.2bnCNY 35.8bnCNY 38.6bn+7.8%
    NOPATCNY 23.9bnCNY 25.8bnCNY 27.7bnCNY 29.9bnCNY 32.2bn+7.8%
    Add depreciation & amortisationCNY 10.5bnCNY 11.3bnCNY 12.2bnCNY 13.1bnCNY 14.1bn+7.8%
    Less capital expenditureCNY -22.3bnCNY -24.0bnCNY -25.8bnCNY -27.8bnCNY -30.0bn+7.8%
    Less increase in working capitalCNY 7.0bnCNY 7.6bnCNY 8.2bnCNY 8.8bnCNY 9.5bn-7.8%
    Free cashflow to firmCNY 19.2bnCNY 20.6bnCNY 22.2bnCNY 24.0bnCNY 25.8bn+7.8%
    Discount factor0.97180.91770.86660.81830.7728-
    Present valueCNY 18.6bnCNY 18.9bnCNY 19.3bnCNY 19.6bnCNY 20.0bn+1.8%
    Present Value Of The ForecastCNY 96.4bn

    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
    Beta0.557Reported 0.339, pulled toward 1.0 (Blume)
    Cost of equity7.10%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 286.8bn72.8% of capital
    Total debtCNY 107.1bn27.2% of capital, book value as a proxy
    Tax rate16.5%Effective, capped at statutory
    WACC5.90%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 234.21

    84% of EV

    Forecast FCFF, final year
    CNY 25.8bn
    Capex at depreciation, working capital in reinvestment
    CNY 32.2bn
    Less reinvestment at g/ROIC (34.1% of NOPAT)
    CNY -11.0bn
    Capitalised
    CNY 21.2bn
    ROIC (reported)
    7.3%
    Terminal value, undiscounted
    CNY 640.5bn
    Terminal value, discounted
    CNY 494.9bn
    Enterprise value
    CNY 591.4bn
    Less net debt
    CNY -106.1bn
    Equity value
    CNY 697.5bn

    Exit at 13.4x EBITDA

    Value per shareCNY 251.93

    85% of EV

    Terminal value, undiscounted
    CNY 708.7bn
    Terminal value, discounted
    CNY 547.7bn
    Enterprise value
    CNY 644.1bn
    Less net debt
    CNY -106.1bn
    Equity value
    CNY 750.2bn

    Spread between methods: 7%.

    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%
    3.90%376.49425.86510.16687.831312.61
    4.90%276.17292.19314.65348.63406.52
    5.90%221.52227.12234.21243.56256.56
    6.90%187.13188.62190.33192.34194.77
    7.90%165.32165.81166.29166.78167.27

    Outlined: this model. Green text: above today's price of 89.68. 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 year7.8%-13.1%-20.9pp
    EBIT margin2.0%0.6%-1.4pp
    Discount rate5.9%18.0%+12.1pp
    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.