Key Insights
The projected fair value for China Merchants Port Holdings is HK$13.57 based on 2 Stage Free Cash Flow to Equity
China Merchants Port Holdings' HK$9.74 share price signals that it might be 28% undervalued
Analyst price target for 144 is HK$12.08 which is 11% below our fair value estimate
Today we will run through one way of estimating the intrinsic value of China Merchants Port Holdings Company Limited (HKG:144) by projecting its future cash flows and then discounting them to today's value. Our analysis will employ the Discounted Cash Flow (DCF) model. Don't get put off by the jargon, the math behind it is actually quite straightforward.
Companies can be valued in a lot of ways, so we would point out that a DCF is not perfect for every situation. If you want to learn more about discounted cash flow, the rationale behind this calculation can be read in detail in the Simply Wall St analysis model.
The Method
We are going to use a two-stage DCF model, which, as the name states, takes into account two stages of growth. The first stage is generally a higher growth period which levels off heading towards the terminal value, captured in the second 'steady growth' period. In the first stage we need to estimate the cash flows to the business over the next ten years. Where possible we use analyst estimates, but when these aren't available we extrapolate the previous free cash flow (FCF) from the last estimate or reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. We do this to reflect that growth tends to slow more in the early years than it does in later years.
A DCF is all about the idea that a dollar in the future is less valuable than a dollar today, so we discount the value of these future cash flows to their estimated value in today's dollars:
10-year free cash flow (FCF) estimate
| 2024 | 2025 | 2026 | 2027 | 2028 | 2029 | 2030 | 2031 | 2032 | 2033 |
Levered FCF (HK$, Millions) | HK$5.40b | HK$5.64b | HK$5.65b | HK$5.68b | HK$5.75b | HK$5.83b | HK$5.92b | HK$6.02b | HK$6.13b | HK$6.24b |
Growth Rate Estimate Source | Analyst x2 | Analyst x2 | Est @ 0.09% | Est @ 0.68% | Est @ 1.09% | Est @ 1.37% | Est @ 1.57% | Est @ 1.71% | Est @ 1.81% | Est @ 1.88% |
Present Value (HK$, Millions) Discounted @ 11% | HK$4.9k | HK$4.6k | HK$4.1k | HK$3.7k | HK$3.4k | HK$3.1k | HK$2.8k | HK$2.6k | HK$2.3k | HK$2.1k |
("Est" = FCF growth rate estimated by Simply Wall St)
Present Value of 10-year Cash Flow (PVCF) = HK$33b
We now need to calculate the Terminal Value, which accounts for all the future cash flows after this ten year period. The Gordon Growth formula is used to calculate Terminal Value at a future annual growth rate equal to the 5-year average of the 10-year government bond yield of 2.0%. We discount the terminal cash flows to today's value at a cost of equity of 11%.
Terminal Value (TV)= FCF2033 × (1 + g) ÷ (r – g) = HK$6.2b× (1 + 2.0%) ÷ (11%– 2.0%) = HK$69b
Present Value of Terminal Value (PVTV)= TV / (1 + r)10= HK$69b÷ ( 1 + 11%)10= HK$24b
The total value is the sum of cash flows for the next ten years plus the discounted terminal value, which results in the Total Equity Value, which in this case is HK$57b. In the final step we divide the equity value by the number of shares outstanding. Relative to the current share price of HK$9.7, the company appears a touch undervalued at a 28% 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.
SEHK:144 Discounted Cash Flow February 27th 2024
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 China Merchants Port 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 11%, which is based on a levered beta of 1.693. 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.
SWOT Analysis for China Merchants Port Holdings
Strength
Weakness
Opportunity
Threat
Moving On:
Whilst important, the DCF calculation ideally won't be the sole piece of analysis you scrutinize for a company. DCF models are not the be-all and end-all of investment valuation. Rather it should be seen as a guide to "what assumptions need to be true for this stock to be under/overvalued?" For instance, if the terminal value growth rate is adjusted slightly, it can dramatically alter the overall result. Why is the intrinsic value higher than the current share price? For China Merchants Port Holdings, there are three essential items you should explore:
Risks: To that end, you should be aware of the 2 warning signs we've spotted with China Merchants Port Holdings .
Future Earnings: How does 144'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 High Quality Alternatives: Do you like a good all-rounder? Explore our interactive list of high quality stocks to get an idea of what else is out there you may be missing!
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.
關鍵見解
根據兩階段自由現金流入股本計算,招商局港口控股的預計公允價值爲13.57港元
招商局港口控股9.74港元的股價表明其估值可能低估28%
分析師144的目標股價爲12.08港元,比我們的公允價值估計低11%
今天,我們將介紹一種估算招商局港口控股有限公司(HKG: 144)內在價值的方法,即預測其未來的現金流,然後將其折現爲今天的價值。我們的分析將採用貼現現金流(DCF)模型。不要被行話嚇跑,它背後的數學其實很簡單。
公司可以通過多種方式獲得估值,因此我們要指出,DCF並不適合所有情況。如果您想了解有關折扣現金流的更多信息,可以在Simply Wall St分析模型中詳細閱讀此計算背後的理由。
該方法
我們將使用兩階段的DCF模型,顧名思義,該模型考慮了兩個增長階段。第一階段通常是更高的增長期,在第二個 “穩定增長” 時期中,向終值趨於平穩。在第一階段,我們需要估計未來十年企業的現金流。在可能的情況下,我們會使用分析師的估計值,但是如果這些估計值不可用,我們會從最新的估計值或報告值中推斷出先前的自由現金流(FCF)。我們假設,在此期間,自由現金流萎縮的公司將減緩萎縮速度,而自由現金流增長的公司的增長率將放緩。我們這樣做是爲了反映出早期增長的放緩幅度往往比以後的幾年更大。
差價合約就是這樣的想法,即未來一美元的價值低於今天的一美元,因此我們將這些未來現金流的價值折現爲以今天的美元計算的估計價值:
10 年自由現金流 (FCF) 估計
| 2024 | 2025 | 2026 | 2027 | 2028 | 2029 | 2030 | 2031 | 2032 | 2033 |
槓桿式FCF(港元,百萬元) | 5.40億港元 | 5.64億港元 | 5.65億港元 | 5.68億港元 | 5.75億港元 | 5.83億港元 | 592億港元 | 60.2億港元 | 613億港元 | 624億港元 |
增長率估算來源 | 分析師 x2 | 分析師 x2 | Est @ 0.09% | Est @ 0.68% | 東部標準時間 @ 1.09% | 東部標準時間 @ 1.37% | Est @ 1.57% | Est @ 1.71% | Est @ 1.81% | Est @ 1.88% |
現值(港元,百萬港元)折扣 @ 11% | 4.9 萬港元 | 4.6 萬港元 | 4.1 萬港元 | 370 萬港元 | 3.4 萬港元 | 3.1 萬港元 | 280 萬港元 | 2.6 萬港元 | 230 萬港元 | 210 萬港元 |
(“Est” = Simply Wall St估計的FCF增長率)
10 年期現金流 (PVCF) 的現值 = 330億港元
我們現在需要計算終值,該值涵蓋了這十年之後的所有未來現金流。戈登增長公式用於計算終值,其未來年增長率等於10年期國債收益率2.0%的5年平均水平。我們將終端現金流折現爲今天的價值,權益成本爲11%。
終值 (TV) = FCF2033 × (1 + g) ÷ (r — g) = 62億港元× (1 + 2.0%) ÷ (11% — 2.0%) = 690億港元
終端價值的現值 (PVTV) = TV/(1 + r) 10= 690億港元÷ (1 + 11%) 10= 240億港元
總價值是未來十年的現金流總額加上折後的終端價值,由此得出總權益價值,在本例中爲570億港元。在最後一步中,我們將股票價值除以已發行股票的數量。相對於目前的9.7港元的股價,該公司的估值似乎略有低估,與目前的股價相比折扣了28%。但請記住,這只是一個近似的估值,就像任何複雜的公式一樣,垃圾進出。
SEHK: 144 貼現現金流 2024 年 2 月 27 日
假設
我們要指出的是,貼現現金流的最重要投入是貼現率,當然還有實際的現金流。如果你不同意這些結果,那就自己計算一下,試一試假設。DCF也沒有考慮一個行業可能的週期性,也沒有考慮公司未來的資本需求,因此它沒有全面反映公司的潛在表現。鑑於我們將招商局港口控股公司視爲潛在股東,因此使用權益成本作爲貼現率,而不是構成債務的資本成本(或加權平均資本成本,WACC)。在此計算中,我們使用了11%,這是基於1.693的槓桿測試版。Beta是衡量股票與整個市場相比波動性的指標。我們的測試版來自全球可比公司的行業平均貝塔值,設定在0.8到2.0之間,這是一個穩定的業務的合理範圍。
招商局港口控股公司的 SWOT 分析
力量
弱點
機會
威脅
繼續前進:
雖然重要,但理想情況下,DCF的計算不會是您爲公司仔細檢查的唯一分析內容。DCF模型並不是投資估值的萬能藥。相反,它應該被視爲 “需要哪些假設才能低估/高估這隻股票的價值?” 的指南例如,如果稍微調整終值增長率,則可能會極大地改變整體結果。爲什麼內在價值高於當前股價?對於招商局港口控股而言,您應該探索三個基本項目:
風險:爲此,您應該注意我們在招商局港口控股公司發現的兩個警告信號。
未來收益:144的增長率與同行和整個市場相比如何?通過與我們的免費分析師增長預期圖表互動,深入了解未來幾年的分析師共識數字。
其他高質量的替代品:你喜歡一個優秀的全能選手嗎?瀏覽我們的高品質股票互動清單,了解您可能還會錯過什麼!
PS。Simply Wall St應用程序每天對聯交所的每隻股票進行折扣現金流估值。如果您想找到其他股票的計算結果,請在此處搜索。
對這篇文章有反饋嗎?對內容感到擔憂嗎?請直接聯繫我們。或者,也可以發送電子郵件至編輯團隊 (at) simplywallst.com。
Simply Wall St的這篇文章本質上是籠統的。我們僅使用公正的方法根據歷史數據和分析師的預測提供評論,我們的文章無意作爲財務建議。它不構成買入或賣出任何股票的建議,也沒有考慮到您的目標或財務狀況。我們的目標是爲您提供由基本數據驅動的長期重點分析。請注意,我們的分析可能不考慮最新的價格敏感型公司公告或定性材料。簡而言之,華爾街沒有持有任何上述股票的頭寸。