DCF Studio

    H78.SI · SES · Real Estate

    Hongkong Land Holdings Limited

    Also onConsensus Drift

    Implied value per share

    USD -0.18

    Market price

    USD 8.64

    Implied upside

    -102.0%

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

    AdjustedCapital expenditure runs at 6.0% of revenue against depreciation of 0.8%. 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 67.8x 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
    USD -0.18-102.0%
    Exit multiple
    USD 0.52-93.9%
    Market price
    USD 8.64

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0m189m378mFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 1.3bnUSD 1.1bnUSD 934.6mUSD 807.6mUSD 697.9m-13.6%
    EBITUSD 408.1mUSD 352.7mUSD 304.8mUSD 263.4mUSD 227.6m-13.6%
    NOPATUSD 306.1mUSD 264.5mUSD 228.6mUSD 197.5mUSD 170.7m-13.6%
    Add depreciation & amortisationUSD 10.3mUSD 8.9mUSD 7.7mUSD 6.6mUSD 5.7m-13.6%
    Less capital expenditureUSD -75.4mUSD -65.2mUSD -56.3mUSD -48.7mUSD -42.0m-13.6%
    Less increase in working capitalUSD 137.1mUSD 118.4mUSD 102.3mUSD 88.4mUSD 76.4m+13.6%
    Free cashflow to firmUSD 378.0mUSD 326.7mUSD 282.3mUSD 243.9mUSD 210.8m-13.6%
    Discount factor0.96810.90730.85030.79690.7468-
    Present valueUSD 366.0mUSD 296.4mUSD 240.0mUSD 194.4mUSD 157.4m-19.0%
    Present Value Of The ForecastUSD 1.3bn

    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
    Beta0.567Reported 0.354, pulled toward 1.0 (Blume)
    Cost of equity7.89%Risk-free + beta x equity risk premium
    Cost of debt4.20%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationUSD 18.4bn75.0% of capital
    Total debtUSD 6.1bn25.0% of capital, book value as a proxy
    Tax rate25.0%Effective, capped at statutory
    WACC6.70%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 shareUSD -0.18

    61% of EV

    Forecast FCFF, final year
    USD 210.8m
    Capex at depreciation, working capital in reinvestment
    USD 170.7m
    Less reinvestment at g/ROIC (37.3% of NOPAT)
    USD -63.7m
    Capitalised
    USD 107.0m
    ROIC (WACC floor)
    6.7%
    Terminal value, undiscounted
    USD 2.6bn
    Terminal value, discounted
    USD 1.9bn
    Enterprise value
    USD 3.2bn
    Less net debt
    USD 3.6bn
    Equity value
    USD -386.9m

    Exit at 20.0x EBITDA

    Value per shareUSD 0.52

    74% of EV

    Terminal value, undiscounted
    USD 4.7bn
    Terminal value, discounted
    USD 3.5bn
    Enterprise value
    USD 4.7bn
    Less net debt
    USD 3.6bn
    Equity value
    USD 1.1bn

    Sensitivity

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

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    4.70%0.320.330.340.340.35
    5.70%0.030.030.040.040.05
    6.70%-0.19-0.18-0.18-0.17-0.17
    7.70%-0.34-0.34-0.34-0.33-0.33
    8.70%-0.46-0.46-0.46-0.45-0.45

    Outlined: this model. Green text: above today's price of 8.64. 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 year-13.6%41.2%+54.8pp
    Discount rate6.7%2.6%-4.1pp
    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.