DCF Studio

    C09.SI · SES · Real Estate

    City Developments Limited

    Also onConsensus Drift

    Implied value per share

    SGD -8.03

    Market price

    SGD 8.05

    Implied upside

    -199.8%

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

    AdjustedFree cashflow is negative in at least one forecast year, so terminal value carries most of the valuation.
    AdjustedCapital expenditure runs at 16.4% of revenue against depreciation of 7.5%. 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: USD assumption - no free live source available for this market.

    Current EV/EBITDA of 33.0x sits outside a defensible 3-20x band, so the exit multiple is capped at 20.0x. A multiple that far out usually means EBITDA is the wrong denominator for this business.

    Value Per Share

    Perpetuity growth
    SGD -8.03-199.8%
    Exit multiple
    SGD -0.84-110.5%
    Market price
    SGD 8.05

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (SGD). Outflows negative.

    -79832673-399163370FY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todaySGD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueSGD 3.7bnSGD 3.8bnSGD 3.9bnSGD 4.0bnSGD 4.1bn+2.9%
    EBITSGD 365.2mSGD 375.7mSGD 386.6mSGD 397.7mSGD 409.2m+2.9%
    NOPATSGD 273.9mSGD 281.8mSGD 289.9mSGD 298.3mSGD 306.9m+2.9%
    Add depreciation & amortisationSGD 277.6mSGD 285.6mSGD 293.9mSGD 302.4mSGD 311.1m+2.9%
    Less capital expenditureSGD -606.1mSGD -623.6mSGD -641.6mSGD -660.1mSGD -679.2m+2.9%
    Less increase in working capitalSGD -16.7mSGD -17.1mSGD -17.6mSGD -18.1mSGD -18.7m+2.9%
    Free cashflow to firmSGD -71.2mSGD -73.3mSGD -75.4mSGD -77.6mSGD -79.8m-2.9%
    Discount factor0.97650.93100.88770.84640.8070-
    Present valueSGD -69.6mSGD -68.2mSGD -66.9mSGD -65.7mSGD -64.4m+1.9%
    Present Value Of The ForecastSGD -334.8m

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate4.20%USD assumption - no free live source available for this market (assumption)
    Equity risk premium6.50%Market assumption
    Beta0.625Reported 0.440, pulled toward 1.0 (Blume)
    Cost of equity8.26%Risk-free + beta x equity risk premium
    Cost of debt4.20%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationSGD 7.2bn33.9% of capital
    Total debtSGD 14.1bn66.1% of capital, book value as a proxy
    Tax rate25.0%Effective, capped at statutory
    WACC4.88%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 shareSGD -8.03

    107% of EV

    Forecast FCFF, final year
    SGD -79.8m
    Capex at depreciation, working capital in reinvestment
    SGD 306.9m
    Less reinvestment at g/ROIC (51.2% of NOPAT)
    SGD -157.2m
    Capitalised
    SGD 149.7m
    ROIC (WACC floor)
    4.9%
    Terminal value, undiscounted
    SGD 6.4bn
    Terminal value, discounted
    SGD 5.2bn
    Enterprise value
    SGD 4.9bn
    Less net debt
    SGD 12.0bn
    Equity value
    SGD -7.2bn

    Exit at 20.0x EBITDA

    Value per shareSGD -0.84

    103% of EV

    Terminal value, undiscounted
    SGD 14.4bn
    Terminal value, discounted
    SGD 11.6bn
    Enterprise value
    SGD 11.3bn
    Less net debt
    SGD 12.0bn
    Equity value
    SGD -752.0m

    Sensitivity

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

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    2.88%-3.22-3.17-3.11——
    3.88%-6.29-6.26-6.22-6.18-5.98
    4.88%-8.09-8.06-8.03-8.00-7.98
    5.88%-9.26-9.24-9.22-9.19-9.17
    6.88%-10.08-10.06-10.04-10.03-10.01

    Outlined: this model. Green text: above today's price of 8.05. 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
    Revenue growth, every year2.9%37.0%+34.1pp
    EBIT margin9.9%31.8%+21.9pp
    Discount rate4.9%2.6%-2.2pp
    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.