O39.SI · SES · Financial Services

Oversea-Chinese Banking Corporation Limited

Also onConsensus Drift

Implied value per share

SGD 45.71

Market price

SGD 31.38

Implied upside

+45.7%

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.

NoteRisk-free rate is an assumption: USD assumption - no free live source available for this market.

Value Per Share

Perpetuity growth

SGD 45.71+45.7%

Exit multiple

SGD 45.45+44.8%

Market price

SGD 31.38

Same forecast, different terminal treatment. Percentages vs price.

Assumptions

Discount rate (WACC)6.90%Growth after the forecast2.50%Exit EV/EBITDA13.0xTax rate15.08%Capex, % of revenue4.82%Depreciation, % of revenue4.10%Working capital, % of revenue growth-81.99%

Forecast Cashflows

Reporting currency (SGD). Outflows negative.

Nominal FCFFDiscounted to todaySGD

Line	FY26	FY27	FY28	FY29	FY30	CAGR
Revenue	SGD 15.9bn	SGD 17.3bn	SGD 18.9bn	SGD 20.6bn	SGD 22.5bn	+9.1%
EBIT	SGD 9.8bn	SGD 10.7bn	SGD 11.7bn	SGD 12.7bn	SGD 13.9bn	+9.1%
NOPAT	SGD 8.3bn	SGD 9.1bn	SGD 9.9bn	SGD 10.8bn	SGD 11.8bn	+9.1%
Add depreciation & amortisation	SGD 650.5m	SGD 709.8m	SGD 774.5m	SGD 845.1m	SGD 922.1m	+9.1%
Less capital expenditure	SGD -764.9m	SGD -834.7m	SGD -910.7m	SGD -993.7m	SGD -1.1bn	+9.1%
Less increase in working capital	SGD 1.1bn	SGD 1.2bn	SGD 1.3bn	SGD 1.4bn	SGD 1.5bn	-9.1%
Free cashflow to firm	SGD 9.3bn	SGD 10.1bn	SGD 11.1bn	SGD 12.1bn	SGD 13.2bn	+9.1%
Discount factor	0.9672	0.9047	0.8463	0.7917	0.7405	-
Present value	SGD 9.0bn	SGD 9.2bn	SGD 9.4bn	SGD 9.6bn	SGD 9.8bn	+2.1%
Present Value Of The Forecast	SGD 46.8bn

Discount Rate

Source shown per component. All overridable above.

Risk-free rate	4.20%	USD assumption - no free live source available for this market (assumption)
Equity risk premium	6.50%	Market assumption
Beta	0.471	Reported 0.210, pulled toward 1.0 (Blume)
Cost of equity	7.26%	Risk-free + beta x equity risk premium
Cost of debt	6.20%	Implied cost of debt of 35.0% is not a credible funding cost, so risk-free + 2bp is assumed instead. Interest expense and reported debt are measuring different things - common for banks, whose interest expense includes deposits that total debt excludes.
Market capitalisation	SGD 141.1bn	82.1% of capital
Total debt	SGD 30.7bn	17.9% of capital, book value as a proxy
Tax rate	15.1%	Effective, capped at statutory
WACC	6.90%	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 shareSGD 45.71

75% of EV

Forecast FCFF, final year: SGD 13.2bn
Capex at depreciation, working capital in reinvestment: SGD 11.9bn
Less reinvestment at g/ROIC (29.9% of NOPAT): SGD -3.6bn
Capitalised: SGD 8.3bn
ROIC (reported): 8.4%

Terminal value, undiscounted: SGD 194.2bn
Terminal value, discounted: SGD 143.8bn
Enterprise value: SGD 190.6bn
Less net debt: SGD -15.0bn
Equity value: SGD 205.6bn

Exit at 13.0x EBITDA

Value per shareSGD 45.45

75% of EV

Terminal value, undiscounted: SGD 192.6bn
Terminal value, discounted: SGD 142.6bn
Enterprise value: SGD 189.4bn
Less net debt: SGD -15.0bn
Equity value: SGD 204.4bn

Spread between methods: 1%.

Sensitivity

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

Long-run growth
Discount rate	1.50%	2.00%	2.50%	3.00%	3.50%
4.90%	66.46	71.27	78.04	88.29	105.75
5.90%	52.65	54.63	57.15	60.49	65.18
6.90%	43.94	44.75	45.71	46.89	48.39
7.90%	37.94	38.19	38.48	38.80	39.17
8.90%	33.81	33.91	34.01	34.11	34.22

Outlined: this model. Green text: above today's price of 31.38. 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.

Input	Model	Implied	Gap
Revenue growth, every year	9.1%	0.2%	-8.9pp
EBIT margin	61.8%	40.2%	-21.6pp
Discount rate	6.9%	9.7%	+2.8pp

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.