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,我们将简单介绍一种估值方法,通过预测深圳国际控股有限公司(HKG:152)未来的现金流并将其折现为今天的价值,来评估其作为投资机会的吸引力。为此,我们将利用贴现现金流(DCF)模型。它真的没有那么多东西,尽管它可能看起来相当复杂。
我们通常认为,一家公司的价值是它未来将产生的所有现金的现值。然而,贴现现金流只是众多估值指标中的一个,它也并非没有缺陷。如果你对这类估值还有一些亟待解决的问题,不妨看看Simply Wall St.的分析模型。
查看我们对深圳国际控股的最新分析
该方法
由于深圳国际控股在基础设施领域运营,我们需要以略有不同的方式计算内在价值。在这种方法中,使用每股股息(DPS),因为自由现金流很难估计,而且分析师往往不报告。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。预计股息的年增长率将相当于10年期政府债券收益率1.6%的5年平均水平。然后,我们以7.6%的股本成本将这个数字与今天的价值贴现。与目前6.9港元的股价相比,该公司的估值似乎相当低,较目前的股价有43%的折让。任何计算中的假设都会对估值产生很大影响,因此最好将其视为粗略估计,而不是精确到最后一分钱。
每股价值=预期每股股息/(折现率-永久增长率)
=港币0.7元/(7.6%-1.6%)
=12.0港元
联交所:152贴现现金流量2022年8月3日
假设
上述计算在很大程度上取决于两个假设。第一个是贴现率,另一个是现金流。投资的一部分是你自己对一家公司未来业绩的评估,所以你自己试一试计算,检查你自己的假设。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。鉴于我们将深圳国际控股视为潜在股东,折现率使用的是股权成本,而不是占债务的资本成本(加权平均资本成本,WACC)。在这个计算中,我们使用了7.6%,这是基于杠杆率为1.257的测试版。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。
下一步:
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,贴现现金流模型的最佳用途是测试某些假设和理论,看看它们是否会导致公司被低估或高估。如果一家公司以不同的速度增长,或者如果其股本成本或无风险利率大幅变化,产出可能看起来非常不同。为什么内在价值高于当前股价?对于深圳国际控股,我们列出了另外三个你应该探索的因素:
- 风险:例如,承担风险-深圳国际控股有限公司4个警示标志(还有一点令人担忧)我们认为你应该知道。
- 未来收益:152的增长率与同行和更广泛的市场相比如何?通过与我们的免费分析师增长预期图表互动,更深入地挖掘分析师对未来几年的共识数字。
- 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!
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。