Estimating The Intrinsic Value Of China Longyuan Power Group Corporation Limited (HKG:916)

Simply Wall St.2023-12-05

Key Insights China Longyuan Power Group's estimated fair value is HK$4.76 based on Dividend Discount Model China Longyuan Power Group's HK$5.59 share price indicates it is trading at similar levels ...

Source Link

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Comments

We need your insight to fill this gap

Leave a comment

{"i18n":{"language":"en_US"},"isChannel":false,"data":{"share":"https://ttm.financial/m/news/2389794522?lang=en_US&edition=fundamental","thumbnail":"https://images.simplywall.st/asset/industry/9621063-choice2-main-header/1585186854995","is_english":true,"pubTime":"2023-12-05 10:31","share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","id":"2389794522","market":"hk","top_or_hot":-1,"title":"Estimating The Intrinsic Value Of China Longyuan Power Group Corporation Limited (HKG:916)","media":"Simply Wall St.","content":"<div>\n<p>Key Insights China Longyuan Power Group's estimated fair value is HK$4.76 based on Dividend Discount Model   China Longyuan Power Group's HK$5.59 share price indicates it is trading at similar levels ...</p>\n\n<a href=\"https://simplywall.st/stocks/hk/utilities/hkg-916/china-longyuan-power-group-shares/news/estimating-the-intrinsic-value-of-china-longyuan-power-group\">Source Link</a>\n\n</div>\n","source":"simplywall_highlight","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Estimating The Intrinsic Value Of China Longyuan Power Group Corporation Limited (HKG:916)</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nEstimating The Intrinsic Value Of China Longyuan Power Group Corporation Limited (HKG:916)\n</h2>\n\n<h4 class=\"meta\">\n\n\n2023-12-05 10:31 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://simplywall.st/stocks/hk/utilities/hkg-916/china-longyuan-power-group-shares/news/estimating-the-intrinsic-value-of-china-longyuan-power-group><strong>Simply Wall St.</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Key Insights China Longyuan Power Group's estimated fair value is HK$4.76 based on Dividend Discount Model   China Longyuan Power Group's HK$5.59 share price indicates it is trading at similar levels ...</p>\n\n<a href=\"https://simplywall.st/stocks/hk/utilities/hkg-916/china-longyuan-power-group-shares/news/estimating-the-intrinsic-value-of-china-longyuan-power-group\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"00916","symbol_name":"龙源电力","start_time":0,"source_url":"https://simplywall.st/stocks/hk/utilities/hkg-916/china-longyuan-power-group-shares/news/estimating-the-intrinsic-value-of-china-longyuan-power-group","article_id":"2389794522","we_media_id":null,"thumbnails":["https://images.simplywall.st/asset/industry/9621063-choice2-main-header/1585186854995"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2389794522","pubTimestamp":1701743477,"sourceInfo":{"source_id":"simplywall_highlight","name":"Simply Wall St."},"weMediaInfo":null,"summary":"Key Insights China Longyuan Power Group's estimated fair value is HK$4.76 based on Dividend Discount Model China...","collect":0,"end_time":0,"defaultTopTitle":"simplywall.st","property":[],"viewcount":null,"language":"en","relate_stocks":{"00916":"龙源电力","LU0054450605.USD":"HSBC GIF GLOBAL EMERGING MARKTS EQ \"AD\" INC","LU0449515922.USD":"HSBC GIF GLOBAL EMERGING MARKETS EQUITY \"PC\" (USD)ACC","BK1558":"风电股","BK1594":"碳中和概念股","DCF":"Dreyfus Alcentra Global Credit Income 2024 Target Term Fund, Inc","BK1154":"新能源发电业者","LU0823040885.USD":"东方汇理新兴市场焦点股票基金"},"translate_title":"估计中国龙源电力集团股份有限公司（香港：916）的内在价值","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"00916":1,"DCF":1},"content_text":"Key Insights China Longyuan Power Group's estimated fair value is HK$4.76 based on Dividend Discount Model   China Longyuan Power Group's HK$5.59 share price indicates it is trading at similar levels as its fair value estimate    The CN¥10.07 analyst price target for 916 is 112% more than our estimate of fair value   In this article we are going to estimate the intrinsic value of China Longyuan Power Group Corporation Limited (HKG:916) by taking the expected future cash flows and discounting them to their present value.  This will be done using the Discounted Cash Flow (DCF) model.  Believe it or not, it's not too difficult to follow, as you'll see from our example!  We would caution that there are many ways of valuing a company and, like the DCF, each technique has advantages and disadvantages in certain scenarios.  If you still have some burning questions about this type of valuation, take a look at the Simply Wall St analysis model.  View our latest analysis for China Longyuan Power Group  Is China Longyuan Power Group Fairly Valued?   As China Longyuan Power Group operates in the renewable energy 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.  The 'Gordon Growth Model' is used, which simply assumes that dividend payments will continue to increase at a sustainable growth rate forever.  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 2.0%. We then discount this figure to today's value at a cost of equity of 7.1%.  Compared to the current share price of HK$5.6, the company appears   around fair value    at the time of writing.   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)= CN¥0.2 / (7.1% – 2.0%)= HK$4.8SEHK:916 Discounted Cash Flow December 5th 2023  Important Assumptions  The calculation above is very dependent on two assumptions. The first is the discount rate and the other is the 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 Longyuan Power Group 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 7.1%, which is based on a levered beta of 0.847. 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 Longyuan Power GroupStrength Debt is well covered by earnings. Balance sheet summary for 916. Weakness Earnings declined over the past year. Dividend is low compared to the top 25% of dividend payers in the Renewable Energy market.Opportunity Annual earnings are forecast to grow faster than the Hong Kong market. Good value based on P/E ratio compared to estimated Fair P/E ratio. ThreatDebt is not well covered by operating cash flow. Paying a dividend but company has no free cash flows. Revenue is forecast to grow slower than 20% per year. Is 916 well equipped to handle threats?  Looking Ahead:  Valuation is only one side of the coin in terms of building your investment thesis, and it  is only one of many factors that you need to assess for a company.  The DCF model is not a perfect stock valuation tool.  Preferably you'd apply different cases and assumptions and see how they would impact the company's valuation.  For example, changes in the company's cost of equity or the risk free rate can significantly impact the valuation.  For China Longyuan Power Group, we've put together three  pertinent  factors  you should consider:   Risks: Case in point, we've spotted   2 warning signs for China Longyuan Power Group  you should be aware of, and 1 of them is significant.   Future Earnings: How does 916'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. Simply Wall St updates its DCF calculation for every Hong Kong stock every day, so if you want to find the intrinsic value of any other stock just search here.Valuation is complex, but we're helping make it simple.Find out whether China Longyuan Power Group is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.View the Free AnalysisHave 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.","kind":null,"is_publish_news":null,"is_publish_highlight":null,"is_publish_live":null,"is_publish_wemedia":null,"editions":null,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.22.4","shortVersion":"4.22.4","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2389794522"}