DCF Studio

    HNR1.DE · GER · Financial Services

    Hannover Rück SE

    Also onConsensus Drift

    Implied value per share

    EUR 1097.16

    Market price

    EUR 252.40

    Implied upside

    +334.7%

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

    Wrong toolThis is a financial. Banks and insurers report no meaningful operating income, and capex and working capital do not mean what a free-cashflow model assumes, so a DCF will misprice it. The model below runs on best-effort numbers - treat it as an illustration, not a valuation.
    AdjustedSome line items were not reported and have been derived. Each one is labelled in the workings below.
    AdjustedReported capital expenditure averages just 0.00% of revenue, which is too low to be the company's real investment - property trusts and similar structures invest through lines that are not reported as capex. Capex has been set to 1.22% of revenue so the forecast is not handed free growth. Override it if the reported figure is right.
    AdjustedCapital expenditure runs at 1.2% of revenue against depreciation of -0.1%. 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: EUR assumption - no free live source available for this market.

    No usable EV/EBITDA (EBITDA is not positive), so the exit multiple falls back to 8x.

    Value Per Share

    Perpetuity growth
    EUR 1097.16+334.7%
    Exit multiple
    EUR 699.15+177.0%
    Market price
    EUR 252.40

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (EUR). Outflows negative.

    0bn1bn3bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayEUR
    LineFY26FY27FY28FY29FY30CAGR
    RevenueEUR 24.7bnEUR 25.3bnEUR 26.0bnEUR 26.7bnEUR 27.4bn+2.6%
    EBITEUR 2.6bnEUR 2.7bnEUR 2.8bnEUR 2.8bnEUR 2.9bn+2.6%
    NOPATEUR 2.0bnEUR 2.1bnEUR 2.1bnEUR 2.2bnEUR 2.3bn+2.6%
    Add depreciation & amortisationEUR -23.3mEUR -23.9mEUR -24.5mEUR -25.2mEUR -25.8m-2.6%
    Less capital expenditureEUR -301.4mEUR -309.3mEUR -317.5mEUR -325.9mEUR -334.5m+2.6%
    Less increase in working capitalEUR 634.7mEUR 651.4mEUR 668.6mEUR 686.3mEUR 704.4m-2.6%
    Free cashflow to firmEUR 2.3bnEUR 2.4bnEUR 2.5bnEUR 2.5bnEUR 2.6bn+2.6%
    Discount factor0.97700.93270.89030.84990.8113-
    Present valueEUR 2.3bnEUR 2.2bnEUR 2.2bnEUR 2.2bnEUR 2.1bn-2.0%
    Present Value Of The ForecastEUR 11.0bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate2.60%EUR assumption - no free live source available for this market (assumption)
    Equity risk premium6.00%Market assumption
    Beta0.414Reported 0.125, pulled toward 1.0 (Blume)
    Cost of equity5.08%Risk-free + beta x equity risk premium
    Cost of debt3.03%Interest expense / average total debt
    Market capitalisationEUR 30.4bn88.0% of capital
    Total debtEUR 4.1bn12.0% of capital, book value as a proxy
    Tax rate22.2%Effective, capped at statutory
    WACC4.76%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 shareEUR 1097.16

    86% of EV

    Forecast FCFF, final year
    EUR 2.6bn
    Capex at depreciation, working capital in reinvestment
    EUR 2.3bn
    Less reinvestment at g/ROIC (20.0% of NOPAT)
    EUR -453.0m
    Capitalised
    EUR 1.8bn
    ROIC (reported)
    12.5%
    Terminal value, undiscounted
    EUR 82.2bn
    Terminal value, discounted
    EUR 66.7bn
    Enterprise value
    EUR 77.7bn
    Less net debt
    EUR -54.6bn
    Equity value
    EUR 132.3bn

    Exit at 8.0x EBITDA

    Value per shareEUR 699.15

    63% of EV

    Terminal value, undiscounted
    EUR 23.0bn
    Terminal value, discounted
    EUR 18.7bn
    Enterprise value
    EUR 29.7bn
    Less net debt
    EUR -54.6bn
    Equity value
    EUR 84.3bn

    Spread between methods: 44%.

    Sensitivity

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

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    2.76%1728.712428.835856.98——
    3.76%1175.381321.491583.392190.705164.14
    4.76%961.581017.191097.171222.351446.66
    5.76%848.03874.61909.19956.091023.52
    6.76%777.51791.77809.25831.23859.79

    Outlined: this model. Green text: above today's price of 252.40. 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
    EBIT margin10.6%-28.4%-39.1pp
    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.