Are Investors Undervaluing Singapore Telecommunications Limited (SGX:Z74) By 43%?
Are Investors Undervaluing Singapore Telecommunications Limited (SGX:Z74) By 43%?
In this article we are going to estimate the intrinsic value of Singapore Telecommunications Limited (SGX:Z74) by projecting its future cash flows and then discounting them to today's value. We will use the Discounted Cash Flow (DCF) model on this occasion. Before you think you won't be able to understand it, just read on! It's actually much less complex than you'd imagine.
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 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.
View our latest analysis for Singapore Telecommunications
Is Singapore Telecommunications Fairly Valued?
We're using the 2-stage growth model, which simply means we take in account two stages of company's growth. In the initial period the company may have a higher growth rate and the second stage is usually assumed to have a stable growth rate. 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.
Generally we assume that a dollar today is more valuable than a dollar in the future, so we discount the value of these future cash flows to their estimated value in today's dollars:
10-year free cash flow (FCF) forecast
2023 | 2024 | 2025 | 2026 | 2027 | 2028 | 2029 | 2030 | 2031 | 2032 | |
Levered FCF (SGD, Millions) | S$2.12b | S$2.03b | S$3.15b | S$3.34b | S$3.51b | S$3.65b | S$3.77b | S$3.88b | S$3.98b | S$4.07b |
Growth Rate Estimate Source | Analyst x3 | Analyst x3 | Analyst x3 | Est @ 6.18% | Est @ 4.88% | Est @ 3.98% | Est @ 3.34% | Est @ 2.90% | Est @ 2.59% | Est @ 2.37% |
Present Value (SGD, Millions) Discounted @ 6.3% | S$2.0k | S$1.8k | S$2.6k | S$2.6k | S$2.6k | S$2.5k | S$2.5k | S$2.4k | S$2.3k | S$2.2k |
("Est" = FCF growth rate estimated by Simply Wall St)
Present Value of 10-year Cash Flow (PVCF) = S$23b
We now need to calculate the Terminal Value, which accounts for all the future cash flows after this ten year period. For a number of reasons a very conservative growth rate is used that cannot exceed that of a country's GDP growth. In this case we have used the 5-year average of the 10-year government bond yield (1.9%) to estimate future growth. In the same way as with the 10-year 'growth' period, we discount future cash flows to today's value, using a cost of equity of 6.3%.
Terminal Value (TV)= FCF2032 × (1 + g) ÷ (r – g) = S$4.1b× (1 + 1.9%) ÷ (6.3%– 1.9%) = S$93b
Present Value of Terminal Value (PVTV)= TV / (1 + r)10= S$93b÷ ( 1 + 6.3%)10= S$50b
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 S$74b. The last step is to then divide the equity value by the number of shares outstanding. Compared to the current share price of S$2.6, the company appears quite undervalued at a 43% 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.
SGX:Z74 Discounted Cash Flow December 26th 2022Important 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. 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 Singapore Telecommunications 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 6.3%, which is based on a levered beta of 0.800. 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 Singapore Telecommunications
- Earnings growth over the past year exceeded the industry.
- Debt is not viewed as a risk.
- Dividends are covered by earnings and cash flows.
- Dividend information for Z74.
- Dividend is low compared to the top 25% of dividend payers in the Telecom market.
- Annual earnings are forecast to grow faster than the Singaporean market.
- Good value based on P/E ratio and estimated fair value.
- Annual revenue is forecast to grow slower than the Singaporean market.
- What else are analysts forecasting for Z74?
Moving On:
Whilst important, the DCF calculation ideally won't be the sole piece of analysis you scrutinize for a company. It's not possible to obtain a foolproof valuation with a DCF model. 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. For example, changes in the company's cost of equity or the risk free rate can significantly impact the valuation. Why is the intrinsic value higher than the current share price? For Singapore Telecommunications, we've compiled three important elements you should explore:
- Risks: Take risks, for example - Singapore Telecommunications has 1 warning sign we think you should be aware of.
- Future Earnings: How does Z74'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. Simply Wall St updates its DCF calculation for every Singaporean stock every day, so if you want to find the intrinsic value of any other stock 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.
在本文中,我们将通过预测新加坡电信有限公司(SGX:Z74)未来的现金流并将其折现为今天的价值来估计其内在价值。在这种情况下,我们将使用贴现现金流(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。
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。如果你想了解更多关于贴现现金流的信息,可以在Simply Wall St.分析模型中详细阅读这种计算背后的原理。
查看我们对新加坡电信的最新分析
新加坡电信的估值公平吗?
我们使用的是两阶段增长模型,也就是说,我们考虑了公司发展的两个阶段。在初期,公司可能有较高的增长率,而第二阶段通常被假设为有一个稳定的增长率。在第一阶段,我们需要估计未来十年为企业带来的现金流。在可能的情况下,我们使用分析师的估计,但当这些估计不可用时,我们会根据上次估计或报告的价值推断先前的自由现金流(FCF)。我们假设,自由现金流萎缩的公司将减缓收缩速度,而自由现金流增长的公司在这段时间内的增长速度将放缓。我们这样做是为了反映出,增长在最初几年往往比后来几年放缓得更多。
一般来说,我们假设今天的一美元比未来的一美元更有价值,所以我们将这些未来现金流的价值贴现到以今天美元计算的估计价值:
10年自由现金流(FCF)预测
2023 | 2024 | 2025 | 2026 | 2027 | 2028 | 2029 | 2030 | 2031 | 2032 | |
杠杆式FCF(新元,百万) | 21.2亿新元 | 20.3亿新元 | 31.5亿新元 | 33.4亿新元 | 35.1亿新元 | 36.5亿新元 | 37.7亿新元 | 38.8亿新元 | 39.8亿新元 | 40.7亿新元 |
增长率预估来源 | 分析师x3 | 分析师x3 | 分析师x3 | Est@6.18% | Est@4.88% | Est@3.98% | Est@3.34% | Est@2.90% | Est@2.59% | Est@2.37% |
现值(新元,百万)贴现@6.3% | 新元$2.0000 | 180万新元 | 260万新元 | 260万新元 | 260万新元 | 250万新元 | 250万新元 | 240万新元 | 230万新元 | 220万新元 |
(“EST”=Simply Wall St.预估的FCF成长率)
10年期现金流现值(PVCF)=230亿新元
我们现在需要计算终端价值,它说明了这十年之后的所有未来现金流。出于一些原因,使用了一个非常保守的增长率,不能超过一个国家的国内生产总值增长率。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(1.9%)来估计未来的增长。与10年“增长”期一样,我们使用6.3%的权益成本将未来现金流贴现至当前价值。
终端值(TV)=FCF2032×(1+g)?(r-g)=新元41亿×(1+1.9%)?(6.3%-1.9%)=930亿新元
终值现值(PVTV)=TV/(1+r)10=930亿新元(1+6.3%)10=500亿新元
总价值是未来十年的现金流总和加上贴现的终端价值,得出总股权价值,在本例中为740亿新元。最后一步是将股权价值除以流通股数量。与目前2.6新元的股价相比,该公司的估值似乎相当低,较目前的股价有43%的折让。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。
新交所:Z74贴现现金流2022年12月26日重要假设
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。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。鉴于我们将新加坡电信视为潜在股东,我们使用股权成本作为贴现率,而不是考虑债务的资本成本(或加权平均资本成本,WACC)。在这个计算中,我们使用了6.3%,这是基于杠杆率为0.800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。
新加坡电信的SWOT分析
- 过去一年的收益增长超过了行业。
- 债务不被视为一种风险。
- 股息由收益和现金流支付。
- Z74的股利信息。
- 与电信市场上前25%的股息支付者相比,股息很低。
- 据预测,该公司的年度收益增速将超过新加坡市场。
- 基于市盈率和估计公允价值的良好价值。
- 预计该公司的年收入增速将低于新加坡市场。
- 分析师还对Z74做出了什么预测?
下一步:
虽然很重要,但理想情况下,贴现现金流计算不会是你为一家公司仔细审查的唯一分析。用贴现现金流模型不可能获得万无一失的估值。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。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。为什么内在价值高于当前股价?对于新加坡电信,我们列出了你应该探索的三个重要元素:
- 风险:例如,承担风险-新加坡电信1个警告标志我们认为你应该意识到。
- 未来收益:与同行和更广泛的市场相比,Z74的增长速度如何?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。
- 其他高质量替代产品:你喜欢一个好的全能运动员吗?浏览我们的高质量股票互动列表,了解您可能会错过的其他股票!
PS.Simply Wall St.每天更新每只新加坡股票的贴现现金流计算,所以如果你想找出任何其他股票的内在价值,只需搜索此处。
对这篇文章有什么反馈吗?担心内容吗? 保持联系直接与我们联系。或者,也可以给编辑组发电子邮件,地址是implywallst.com。
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。
译文内容由第三方软件翻译。
风险及免责提示
- 分享到weixin
- 分享到qq
- 分享到facebook
- 分享到twitter
- 分享到微博
- 粘贴板
使用浏览器的分享功能,分享给你的好友吧