Digital China Holdings Valuation

Is 861 undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

5/6

Valuation Score 5/6

Below Fair Value
Significantly Below Fair Value
Price-To-Sales vs Peers
Price-To-Sales vs Industry
Price-To-Sales vs Fair Ratio
Analyst Forecast

Share Price vs Fair Value

What is the Fair Price of 861 when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: 861 (HK$3.23) is trading below our estimate of fair value (HK$5.61)

Significantly Below Fair Value: 861 is trading below fair value by more than 20%.

Key Valuation Metric

Which metric is best to use when looking at relative valuation for 861?

Key metric: As 861 is unprofitable we use its Price-To-Sales Ratio for relative valuation analysis.

The above table shows the Price to Sales ratio for 861. This is calculated by dividing 861's market cap by their current revenue.
What is 861's PS Ratio?
PS Ratio	0.3x
Sales	CN¥18.61b
Market Cap	CN¥5.02b

861 key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue	0.6x
Enterprise Value/EBITDA	41.7x
PEG Ratio	n/a

Price to Sales Ratio vs Peers

How does 861's PS Ratio compare to its peers?

The above table shows the PS ratio for 861 vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
Company	Forward PS	Estimated Growth	Market Cap
Peer Average	10.9x
2495 Hubei Voicecomm Technology	7.3x	n/a	HK$7.1b
2479 Tianju Dihe (Suzhou) Data	6.3x	n/a	HK$3.6b
6657 Baiwang	11.7x	n/a	HK$8.3b
1782 International Business Digital Technology	18.4x	n/a	HK$2.5b
861 Digital China Holdings	0.3x	9.8%	HK$5.4b

Price-To-Sales vs Peers: 861 is good value based on its Price-To-Sales Ratio (0.3x) compared to the peer average (10.9x).

Price to Sales Ratio vs Industry

How does 861's PS Ratio compare vs other companies in the HK IT Industry?

4 Companies	Price / Sales	Estimated Growth	Market Cap
1147 Edensoft Holdings	0.2x	n/a	US$19.96m
1460 ICO Group	0.1x	n/a	US$16.68m
862 Vision Values Holdings	0.2x	n/a	US$12.60m
8319 Expert Systems Holdings	0.09x	n/a	US$11.76m

No more companies available in this PS range

4 Companies		Estimated Growth	Market Cap

No more companies

Price-To-Sales vs Industry: 861 is good value based on its Price-To-Sales Ratio (0.3x) compared to the Hong Kong IT industry average (1.1x).

Price to Sales Ratio vs Fair Ratio

What is 861's PS Ratio compared to its Fair PS Ratio? This is the expected PS Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

861 PS Ratio vs Fair Ratio.
Fair Ratio
Current PS Ratio	0.3x
Fair PS Ratio	0.8x

Price-To-Sales vs Fair Ratio: 861 is good value based on its Price-To-Sales Ratio (0.3x) compared to the estimated Fair Price-To-Sales Ratio (0.8x).

Analyst Price Targets

What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?

The above table shows the analyst 861 forecast and predictions for the stock price in 12 month’s time.
Date	Share Price	Average 1Y Price Target	Dispersion	High	Low	1Y Actual price	Analysts
Current	HK$3.23	HK$4.50 +39.2%	25.3%	HK$5.98	HK$3.22	n/a	3
Nov ’25	HK$2.81	HK$4.50 +60.0%	25.3%	HK$5.98	HK$3.22	n/a	3
Oct ’25	HK$2.96	HK$4.50 +51.9%	25.3%	HK$5.98	HK$3.22	n/a	3
Sep ’24	HK$2.54	HK$4.74 +86.6%	9.7%	HK$5.20	HK$4.28	HK$3.21	2
Aug ’24	HK$3.05	HK$4.74 +55.4%	9.7%	HK$5.20	HK$4.28	HK$3.19	2
Jul ’24	HK$3.12	HK$4.74 +51.9%	9.7%	HK$5.20	HK$4.28	HK$3.34	2
Jun ’24	HK$3.16	HK$4.74 +50.0%	9.7%	HK$5.20	HK$4.28	HK$3.47	2
May ’24	HK$3.25	HK$4.74 +45.8%	9.7%	HK$5.20	HK$4.28	HK$2.87	2
Apr ’24	HK$3.62	HK$6.05 +67.2%	22.8%	HK$8.00	HK$4.96	HK$2.98	3
Mar ’24	HK$3.86	HK$6.05 +56.8%	22.8%	HK$8.00	HK$4.96	HK$2.78	3

Analyst Forecast: Target price is more than 20% higher than the current share price, but analysts are not within a statistically confident range of agreement.

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