Is Swire Pacific’s Recent Rally Justified After Outperforming Hong Kong Stocks in 2025?

If you’ve been following Swire Pacific, you know this stock isn’t flying under anyone’s radar anymore. Whether you’re wondering if now is the right time to consider it for your portfolio, or just keeping tabs on standout movers, Swire’s journey over the last few years is hard to miss. Its share price climbed a massive 155.4% over the past five years, and even the lighter 16.1% gain in the past year beats many household names. But it’s not all big leaps upward, either. In the past month it’s nudged down by 0.4%, hinting at shifts in investor sentiment as market winds change.

Part of the intrigue comes from broader Hong Kong market developments, which have prompted investors to rethink both risks and rewards in some of the region’s blue-chip names. In the past week, Swire’s stock has gained 1.3%, which could suggest that optimism is starting to bubble up again after a slower start to the year, where it sits at a year-to-date return of -1.8%.

So, here’s the real question: Is Swire Pacific undervalued at today’s levels, or has the recent rally already captured all the upside? When we put the company through the usual six-point undervaluation check, the score is a flat 0 out of 6. Not a single box ticked. But valuation isn’t always so black and white. Let’s break down the main approaches investors use to assess value here and, later on, I’ll share a smarter way of making sense of what Swire’s price actually means.

Swire Pacific scores just 0/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Swire Pacific Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow (DCF) model works by projecting a company’s future cash flows and then discounting those projections back to their present value. This gives investors an estimate of what the business is actually worth today. This approach focuses on future earning power and offers a clearer picture of long-term potential than traditional multiples alone can provide.

For Swire Pacific, the model begins with its latest Free Cash Flow, which stands at HK$9.26 billion. Analysts have direct estimates for the first five years, and Simply Wall St extrapolates further projections to cover a full decade. Cash flow growth fluctuates, with forecasts moving from HK$4.54 billion in 2026 up to HK$5.25 billion by 2035. These amounts are all in billions of Hong Kong dollars, highlighting the scale of Swire Pacific’s operations.

Once those projected values are summed and discounted, the estimated intrinsic value per share is HK$43.65. This is based on the ‘2 Stage Free Cash Flow to Equity’ methodology. When you compare this intrinsic value to the current share price, the DCF-based analysis shows the stock is trading 56.5% above its fair value. This suggests Swire Pacific is currently overvalued according to the DCF method.

Result: OVERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Swire Pacific.

Our Discounted Cash Flow (DCF) analysis suggests Swire Pacific may be overvalued by 56.5%. Find undervalued stocks or create your own screener to find better value opportunities.

Approach 2: Swire Pacific Price vs Earnings

The Price-to-Earnings (PE) ratio is a popular valuation tool for companies that are consistently profitable, offering a quick way to see how much investors are willing to pay for each dollar of earnings. It makes sense for Swire Pacific, as steady profits make future earnings projection more reliable and allow for meaningful comparison to industry benchmarks.

However, deciding what counts as a “normal” or fair PE involves looking beyond the headline number. Companies with stronger growth prospects or lower risk often command higher PE ratios, while those facing challenges might trade below industry averages. Factors such as market volatility, profitability, and projected growth rates all influence what investors consider reasonable.

Swire Pacific currently trades at a PE of 75.38x. That is far above the Industrials sector average of 12.78x and its peer group average of 12.95x. To provide a more tailored benchmark, Simply Wall St uses a Fair Ratio, a proprietary metric reflecting where the PE should realistically land after weighing up the company’s earnings growth, profit margins, market cap, and risk relative to its industry. This approach goes deeper than a straightforward industry or peer average and provides a full picture based on Swire’s unique fundamentals. With a Fair Ratio for Swire Pacific calculated at 15.72x, the company’s current PE multiple looks significantly higher than what would be justified by its profile.

Result: OVERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Swire Pacific Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let’s introduce you to Narratives. A Narrative is a clear, user-created story behind your investment outlook, connecting what you believe about Swire Pacific’s future (such as revenue or margins) with your fair value estimates and the numbers that matter most.

Narratives go beyond basic ratios by letting you spell out what you think will drive the company’s performance and impact its valuation. This approach makes your investment logic explicit; your story, the financial forecast, and the resulting fair value are all part of one straightforward framework.

On Simply Wall St’s Community page, millions of investors can easily access and share Narratives, making the tool both powerful and approachable for all experience levels. Narratives help you decide when to buy or sell by continually comparing your Fair Value to Swire Pacific’s current share price, and are dynamically updated whenever new news, earnings, or market data emerge.

For Swire Pacific, some investors see rising revenue and margins powered by China expansion, giving a fair value as high as HK$90.00, while others worry about weak demand and set their target as low as HK$71.00.

Do you think there's more to the story for Swire Pacific? Create your own Narrative to let the Community know!

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.

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