Today we'll do a simple run through of a valuation method used to estimate the attractiveness of COSCO SHIPPING Development Co., Ltd. (HKG:2866) as an investment opportunity by estimating the company's future cash flows and discounting them to their present value. One way to achieve this is by employing the Discounted Cash Flow (DCF) model. Before you think you won't be able to understand it, just read on! It's actually much less complex than you'd imagine.
Remember though, that there are many ways to estimate a company's value, and a DCF is just one method. For those who are keen learners of equity analysis, the Simply Wall St analysis model here may be something of interest to you.
Check out our latest analysis for COSCO SHIPPING Development
What's The Estimated Valuation?
As COSCO SHIPPING Development operates in the trade distributors sector, we need to calculate the intrinsic value slightly differently. Instead of using free cash flows, which are hard to estimate and often not reported by analysts in this industry, dividends per share (DPS) payments are used. This often underestimates the value of a stock, but it can still be good as a comparison to competitors. We use the Gordon Growth Model, which assumes dividend will grow into perpetuity at a rate that can be sustained. For a number of reasons a very conservative growth rate is used that cannot exceed that of a company's Gross Domestic Product (GDP). In this case we used the 5-year average of the 10-year government bond yield (1.6%). The expected dividend per share is then discounted to today's value at a cost of equity of 8.7%. Compared to the current share price of HK$1.0, the company appears about fair value at a 19% discount to where the stock price trades currently. Remember though, that this is just an approximate valuation, and like any complex formula - garbage in, garbage out.
Value Per Share = Expected Dividend Per Share / (Discount Rate - Perpetual Growth Rate)
= CN¥0.2 / (8.7% – 1.6%)
= HK$1.2
SEHK:2866 Discounted Cash Flow October 3rd 2022
The Assumptions
We would point out that the most important inputs to a discounted cash flow are the discount rate and of course the actual cash flows. If you don't agree with these result, have a go at the calculation yourself and play with the assumptions. The DCF also does not consider the possible cyclicality of an industry, or a company's future capital requirements, so it does not give a full picture of a company's potential performance. Given that we are looking at COSCO SHIPPING Development as potential shareholders, the cost of equity is used as the discount rate, rather than the cost of capital (or weighted average cost of capital, WACC) which accounts for debt. In this calculation we've used 8.7%, which is based on a levered beta of 1.451. Beta is a measure of a stock's volatility, compared to the market as a whole. We get our beta from the industry average beta of globally comparable companies, with an imposed limit between 0.8 and 2.0, which is a reasonable range for a stable business.
Looking Ahead:
Valuation is only one side of the coin in terms of building your investment thesis, and it shouldn't be the only metric you look at when researching a company. The DCF model is not a perfect stock valuation tool. Rather it should be seen as a guide to "what assumptions need to be true for this stock to be under/overvalued?" For example, changes in the company's cost of equity or the risk free rate can significantly impact the valuation. For COSCO SHIPPING Development, there are three fundamental factors you should look at:
- Risks: We feel that you should assess the 3 warning signs for COSCO SHIPPING Development (1 doesn't sit too well with us!) we've flagged before making an investment in the company.
- Other Solid Businesses: Low debt, high returns on equity and good past performance are fundamental to a strong business. Why not explore our interactive list of stocks with solid business fundamentals to see if there are other companies you may not have considered!
- Other Top Analyst Picks: Interested to see what the analysts are thinking? Take a look at our interactive list of analysts' top stock picks to find out what they feel might have an attractive future outlook!
PS. The Simply Wall St app conducts a discounted cash flow valuation for every stock on the SEHK every day. If you want to find the calculation for other stocks just search here.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
今天,我们将简单介绍一种估值方法,该方法通过估计中远航运发展有限公司(HKG:2866)未来的现金流并将其折现为现值,来评估该公司作为投资机会的吸引力。实现这一点的一种方法是使用贴现现金流(DCF)模型。在你认为你将无法理解它之前,只需继续阅读!它实际上比你想象的要简单得多。
不过请记住,有很多方法可以评估一家公司的价值,贴现现金流只是其中一种方法。对于那些热衷于学习股票分析的人来说,这里的Simply Wall St.分析模型可能会让你感兴趣。
查看我们对中远航运发展的最新分析
估计的估价是多少?
由于中远航运发展是在贸易分销商部门运营,我们需要以略有不同的方式计算内在价值。它不使用自由现金流,而是使用每股股息(DPS)支付。自由现金流很难估计,该行业的分析师往往不会报告自由现金流。这往往低估了一只股票的价值,但与竞争对手相比,它仍然是好的。我们使用戈登增长模型,该模型假设股息将以可持续的速度增长为永久股息。由于一些原因,使用了一个非常保守的增长率,不能超过一家公司的国内生产总值(GDP)。在这种情况下,我们使用了10年期政府债券收益率的5年平均值(1.6%)。然后,预期每股股息以8.7%的股本成本折现为今天的价值。与目前1.0港元的股价相比,该公司的公允价值似乎比目前的股价有19%的折让。不过,请记住,这只是一个大致的估值,就像任何复杂的公式一样--垃圾输入,垃圾输出。
每股价值=预期每股股息/(折现率-永久增长率)
=CN元0.2元/(8.7%-1.6%)
=港币1.2元
联交所:2866贴现现金流量2022年10月3日
假设
我们要指出,贴现现金流最重要的投入是贴现率,当然还有实际现金流。如果你不同意这些结果,你可以自己试一试计算,并玩弄一下假设。DCF也没有考虑一个行业可能的周期性,也没有考虑一家公司未来的资本要求,因此它没有给出一家公司潜在业绩的全貌。鉴于我们将中远航运发展视为潜在股东,股权成本被用作贴现率,而不是计入债务的资本成本(或加权平均资本成本,WACC)。在这个计算中,我们使用了8.7%,这是基于杠杆率为1.451的测试值。贝塔系数是衡量一只股票相对于整个市场的波动性的指标。我们的贝塔系数来自全球可比公司的行业平均贝塔系数,强制限制在0.8到2.0之间,这是一个稳定业务的合理范围。
展望未来:
就构建你的投资论文而言,估值只是硬币的一面,它不应该是你在研究一家公司时唯一考虑的指标。贴现现金流模型并不是一个完美的股票估值工具。相反,它应该被视为“什么假设需要成立才能让这只股票被低估或高估”的指南。例如,公司权益成本或无风险利率的变化可能会对估值产生重大影响。对于中远航运发展,你应该考虑三个基本因素:
- 风险:我们认为您应该评估中远航运发展的三个警示(%1与我们的关系不太好!)在投资这家公司之前,我们已经做了标记。
- 其他稳固的企业:低债务、高股本回报率和良好的过去业绩是强劲业务的基础。为什么不探索我们具有坚实商业基本面的股票的互动列表,看看是否有其他您可能没有考虑过的公司!
- 其他顶级分析师选择:有兴趣看看分析师们在想什么吗?看看我们的交互式分析师首选股票列表,看看他们认为哪些股票可能具有诱人的未来前景!
PS.Simply Wall St.应用每天对联交所的每只股票进行现金流贴现估值。如果你想找到其他股票的计算方法,只需搜索此处。
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本文由Simply Wall St.撰写,具有概括性。我们仅使用不偏不倚的方法提供基于历史数据和分析师预测的评论,我们的文章并不打算作为财务建议。它不构成买卖任何股票的建议,也没有考虑你的目标或你的财务状况。我们的目标是为您带来由基本面数据驱动的长期重点分析。请注意,我们的分析可能不会将最新的对价格敏感的公司公告或定性材料考虑在内。Simply Wall St.对上述任何一只股票都没有持仓。