Today we'll do a simple run through of a valuation method used to estimate the attractiveness of Shenzhen International Holdings Limited (HKG:152) as an investment opportunity by projecting its future cash flows and then discounting them to today's value. We will take advantage of the Discounted Cash Flow (DCF) model for this purpose. There's really not all that much to it, even though it might appear quite complex.
We generally believe that a company's value is the present value of all of the cash it will generate in the future. However, a DCF is just one valuation metric among many, and it is not without flaws. If you still have some burning questions about this type of valuation, take a look at the Simply Wall St analysis model.
Check out our latest analysis for Shenzhen International Holdings
The Method
As Shenzhen International Holdings operates in the infrastructure sector, we need to calculate the intrinsic value slightly differently. In this approach dividends per share (DPS) are used, as free cash flow is difficult to estimate and often not reported by analysts. 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. The dividend is expected to grow at an annual growth rate equal to the 5-year average of the 10-year government bond yield of 1.6%. We then discount this figure to today's value at a cost of equity of 7.6%. Compared to the current share price of HK$6.9, the company appears quite undervalued at a 43% discount to where the stock price trades currently. The assumptions in any calculation have a big impact on the valuation, so it is better to view this as a rough estimate, not precise down to the last cent.
Value Per Share = Expected Dividend Per Share / (Discount Rate - Perpetual Growth Rate)
= HK$0.7 / (7.6% – 1.6%)
= HK$12.0
SEHK:152 Discounted Cash Flow August 3rd 2022
The Assumptions
The calculation above is very dependent on two assumptions. The first is the discount rate and the other is the cash flows. Part of investing is coming up with your own evaluation of a company's future performance, so try the calculation yourself and check your own 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 Shenzhen International Holdings 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 7.6%, which is based on a levered beta of 1.257. 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.
Moving On:
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. Instead the best use for a DCF model is to test certain assumptions and theories to see if they would lead to the company being undervalued or overvalued. If a company grows at a different rate, or if its cost of equity or risk free rate changes sharply, the output can look very different. Why is the intrinsic value higher than the current share price? For Shenzhen International Holdings, we've compiled three further factors you should explore:
- Risks: Take risks, for example - Shenzhen International Holdings has 4 warning signs (and 1 which is a bit concerning) we think you should know about.
- Future Earnings: How does 152's growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with our free analyst growth expectation chart.
- 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!
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,我們將簡單介紹一種估值方法,通過預測深圳國際控股有限公司(HKG:152)未來的現金流並將其折現為今天的價值,來評估其作為投資機會的吸引力。為此,我們將利用貼現現金流(DCF)模型。它真的沒有那麼多東西,儘管它可能看起來相當複雜。
我們通常認為,一家公司的價值是它未來將產生的所有現金的現值。然而,貼現現金流只是眾多估值指標中的一個,它也並非沒有缺陷。如果你對這類估值還有一些亟待解決的問題,不妨看看Simply Wall St.的分析模型。
查看我們對深圳國際控股的最新分析
該方法
由於深圳國際控股在基礎設施領域運營,我們需要以略有不同的方式計算內在價值。在這種方法中,使用每股股息(DPS),因為自由現金流很難估計,而且分析師往往不報告。這往往低估了一隻股票的價值,但與競爭對手相比,它仍然是好的。我們使用戈登增長模型,該模型假設股息將以可持續的速度增長為永久股息。預計股息的年增長率將相當於10年期政府債券收益率1.6%的5年平均水平。然後,我們以7.6%的股本成本將這個數字與今天的價值貼現。與目前6.9港元的股價相比,該公司的估值似乎相當低,較目前的股價有43%的折讓。任何計算中的假設都會對估值產生很大影響,因此最好將其視為粗略估計,而不是精確到最後一分錢。
每股價值=預期每股股息/(折現率-永久增長率)
=港幣0.7元/(7.6%-1.6%)
=12.0港元
聯交所:152貼現現金流量2022年8月3日
假設
上述計算在很大程度上取決於兩個假設。第一個是貼現率,另一個是現金流。投資的一部分是你自己對一家公司未來業績的評估,所以你自己試一試計算,檢查你自己的假設。DCF也沒有考慮一個行業可能的週期性,也沒有考慮一家公司未來的資本要求,因此它沒有給出一家公司潛在業績的全貌。鑑於我們將深圳國際控股視為潛在股東,折現率使用的是股權成本,而不是佔債務的資本成本(加權平均資本成本,WACC)。在這個計算中,我們使用了7.6%,這是基於槓桿率為1.257的測試版。貝塔係數是衡量一隻股票相對於整個市場的波動性的指標。我們的貝塔係數來自全球可比公司的行業平均貝塔係數,強制限制在0.8到2.0之間,這是一個穩定業務的合理範圍。
下一步:
就構建你的投資論文而言,估值只是硬幣的一面,它不應該是你在研究一家公司時唯一考慮的指標。貼現現金流模型並不是一個完美的股票估值工具。相反,貼現現金流模型的最佳用途是測試某些假設和理論,看看它們是否會導致公司被低估或高估。如果一家公司以不同的速度增長,或者如果其股本成本或無風險利率大幅變化,產出可能看起來非常不同。為什麼內在價值高於當前股價?對於深圳國際控股,我們列出了另外三個你應該探索的因素:
- 風險:例如,承擔風險-深圳國際控股有限公司4個警示標誌(還有一點令人擔憂)我們認為你應該知道。
- 未來收益:152的增長率與同行和更廣泛的市場相比如何?通過與我們的免費分析師增長預期圖表互動,更深入地挖掘分析師對未來幾年的共識數字。
- 其他穩固的企業:低債務、高股本回報率和良好的過去業績是強勁業務的基礎。為什麼不探索我們具有堅實商業基本面的股票的互動列表,看看是否有其他您可能沒有考慮過的公司!
PS.Simply Wall St.應用每天對聯交所的每隻股票進行現金流貼現估值。如果你想找到其他股票的計算方法,只需搜索此處。
對這篇文章有什麼反饋嗎?擔心內容嗎? 保持聯繫直接與我們聯繫。或者,也可以給編輯組發電子郵件,地址是implywallst.com。
本文由Simply Wall St.撰寫,具有概括性。我們僅使用不偏不倚的方法提供基於歷史數據和分析師預測的評論,我們的文章並不打算作為財務建議。它不構成買賣任何股票的建議,也沒有考慮你的目標或你的財務狀況。我們的目標是為您帶來由基本面數據驅動的長期重點分析。請注意,我們的分析可能不會將最新的對價格敏感的公司公告或定性材料考慮在內。Simply Wall St.對上述任何一隻股票都沒有持倉。