Discounted Cash Flow Calculation for SEHK:1765 using 2 Stage Free Cash Flow to Equity Model
The calculations below outline how an intrinsic value for
Hope Education Group
is arrived at by discounting future cash flows to their present value using the 2 stage method.
We try to start with analysts estimates of free cash flow, however if these are not available we use the most recent financial results. In the 1st stage we continue to grow the free cash flow over a 10 year period, with the growth rate trending towards the perpetual growth rate used in the 2nd stage. The 2nd stage assumes the company grows at a stable rate into perpetuity.
SEHK:1765 DCF 1st Stage: Next 10 year cash flow forecast
Amount off the current price
Hope Education Group
is available for.
Share price is
vs Future cash flow value of
Current Discount Checks
Hope Education Group
to be considered undervalued it must be available for at least 20% below the
current price. Less than 40% is even better.
Hope Education Group's share price is below the future cash flow value, and at a moderate discount (> 20%).
Hope Education Group's share price is below the future cash flow value, and at a substantial discount (> 40%).
PRICE RELATIVE TO MARKET
We can also value a company based on what the stock market is willing to pay for
it. This is similar to the price of fruit (e.g. Mangoes or Avocados) increasing
when they are out of season, or how much your home is worth.
The amount the stock market is willing to pay for
Hope Education Group's
is considered below, and whether this is a fair price.
Price based on past earnings
Hope Education Group's earnings available for a low price, and how does
this compare to other companies in the same industry?
Hope Education Group's earnings are expected to grow significantly at over 20% yearly.
Hope Education Group's revenue is expected to grow by 19% yearly, however this is not considered high growth (20% yearly).
Past and Future Earnings per Share
The accuracy of the analysts who estimate the future performance data can
be gauged below. We look back 3 years and see if they were any good at
predicting what actually occurred. We also show the highest and lowest estimates
looking forward to see if there is a wide range.
Hope Education Group's performance over the past 5 years by checking for:
Has earnings increased in past 5 years? (1 check)
Has the earnings growth in the last year exceeded that of the
industry? (1 check)
Is the recent earnings growth over the last year higher than the average annual growth over the
past 5 years? (1 check)
Is the Return on Equity (ROE) higher than 20%? (1 check)
Is the Return on Assets (ROA) above industry average? (1 check)
Has the Return on Capital Employed (ROCE) increased from 3 years ago? (1 check)
The above checks will fail if the company has reported a loss in the most recent
earnings report. Some checks require at least 3 or 5 years worth of data.
Hope Education Group
has a total score of
0/6, see the detailed checks below.
Note: We use GAAP Net Income excluding extraordinary items in all our calculations.
A company's financial position is much like your own financial position,
it includes everything you own
The boxes below represent the relative size of what makes up
Hope Education Group's finances.
The net worth of a company is the difference between its assets and liabilities.
Hope Education Group is able to meet its short term (1 year) commitments with its holdings of cash and other short term assets.
Hope Education Group's cash and other short term assets cover its long term commitments.
This treemap shows a more detailed breakdown of
Hope Education Group's finances. If any of them are yellow this
indicates they may be out of proportion and red means they relate to one of the
Liabilities and shares
The 'shares' portion represents any funds contributed by the owners (shareholders) and any profits.
High level of physical assets or inventory.
Debt is covered by short term assets, assets are 1.4x debt.
Nearly all companies have debt. Debt in itself isn’t
however if the debt is too high, or the company can’t afford to pay the interest
on its debts this may have impacts in the future.
The graphic below shows equity (available funds) and debt, we ideally want to
see the red area (debt) decreasing.
If there is any debt we look at the companies capability to repay it, and
whether the level has increased over the past 5 years.
Should You Be Worried About Hope Education Group Co., Ltd.'s (HKG:1765) 4.0% Return On Equity?
Our data shows Hope Education Group has a return on equity of 4.0% for the last year. … The formula for return on equity is: Return on Equity = Net Profit ÷ Shareholders' Equity Or for Hope Education Group: 4.0% = CN¥168m ÷ CN¥4.2b (Based on the trailing twelve months to December 2018.) Most know that net profit is the total earnings after all expenses, but the concept of shareholders' equity is a little more complicated. … Combining Hope Education Group's Debt And Its 4.0% Return On Equity Hope Education Group has a debt to equity ratio of 0.53, which is far from excessive.
What Kind Of Investor Owns Most Of Hope Education Group Co., Ltd. (HKG:1765)?
Every investor in Hope Education Group Co., Ltd. … Institutions will often hold stock in bigger companies, and we expect to see insiders owning a noticeable percentage of the smaller ones. … Hope Education Group has a market capitalization of HK$8.1b, so we would expect some institutional investors to have noticed the stock.
Are Investors Undervaluing Hope Education Group Co., Ltd. (HKG:1765) By 48%?
I will use the Discounted Cash Flow (DCF) model. … 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. … We use what is known as a 2-stage model, which simply means we have two different periods of growth rates for the company's cash flows
Why You Should Care About Hope Education Group Co., Ltd.’s (HKG:1765) Low Return On Capital
Specifically, we're going to calculate its Return On Capital Employed (ROCE), in the hopes of getting some insight into the business. … Return On Capital Employed (ROCE): What is it? … Analysts use this formula to calculate return on capital employed:
How Good Is Hope Education Group Co., Ltd. (HKG:1765), When It Comes To ROE?
By way of learning-by-doing, we'll look at ROE to gain a better understanding of Hope Education Group Co., Ltd. … One way to conceptualize this, is that for each HK$1 of shareholders' equity it has, the company made HK$0.15 in profit. … Return on Equity = Net Profit ÷ Shareholders' Equity
How Many Hope Education Group Co., Ltd. (HKG:1765) Shares Do Institutions Own?
If you want to know who really controls Hope Education Group Co., Ltd. … Companies that have been privatized tend to have low insider ownership. … Taking a look at the our data on the ownership groups (below), it's seems that.
A Look At The Intrinsic Value Of Hope Education Group Co Ltd (HKG:1765)
I am going to run you through how I calculated the intrinsic value of Hope Education Group Co Ltd (HKG:1765). … by projecting its future cash flows and then discounting them to today's value. … If you are reading this and its not November 2018 then I highly recommend you check out the latest calculation for Hope Education Group by following the link below
What You Must Know About Hope Education Group Co Ltd's (HKG:1765) ROE
Hope Education Group Co Ltd (HKG:1765) delivered an ROE of 15.49% over the past 12 months, which is relatively in-line with its industry average of 13.65% during the same period. … But ROE does not capture any debt, so we only see high profits and low equity, which is great on the surface. … Check out our latest analysis for Hope Education Group
Hope Education Group Co., Ltd. provides private higher education services in the People’s Republic of China. The company provides self-study examination, adult education, and technical management and consultancy services, as well as sells textbooks and dormitory beddings. As of December 31, 2018, it owned and operated nine schools, including three independent colleges, five higher vocational colleges, and one technical college. The company was founded in 2007 and is headquartered in Chengdu, the People’s Republic of China. Hope Education Group Co., Ltd. is a subsidiary of Hope Education Investment Limited.
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