Discounted Cash Flow Calculation for AMEX:DXF using Excess Returns Model Model
The calculations below outline how an intrinsic value for Dunxin Financial Holdings is arrived at using the Excess Return Model. This approach is used for finance firms where free cash flow is difficult to estimate.
In the Excess Return Model the value of a firm can be written as the sum of capital invested currently in the firm and the present value of excess returns that the firm expects to make in the future.
The model is sensitive to the Return on Equity of the company versus the Cost of Equity, how these are calculated is detailed below the main calculation.
The current share price of
Dunxin Financial Holdings
is above its future cash flow value.
Often investors are willing to pay a
for a company that has a high dividend or the potential for future growth.
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
Dunxin Financial Holdings's
is considered below, and whether this is a fair price.
Price based on past earnings
Dunxin Financial Holdings's earnings available for a low price, and how does
this compare to other companies in the same industry?
Dunxin Financial Holdings's earnings are expected to grow by 7.7% yearly, however this is not considered high growth (20% yearly).
Unable to determine if Dunxin Financial Holdings is high growth as no revenue estimate data is available.
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.
Dunxin Financial Holdings'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.
Dunxin Financial Holdings
has a total score of
3/6, 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
Dunxin Financial Holdings's finances.
The net worth of a company is the difference between its assets and liabilities.
Dunxin Financial Holdings is able to meet its short term (1 year) commitments with its holdings of cash and other short term assets.
Dunxin Financial Holdings has no long term commitments.
This treemap shows a more detailed breakdown of
Dunxin Financial Holdings'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.
Low level of unsold assets.
Debt is covered by short term assets, assets are 3.9x 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.
Management is one of the most important areas of a company. We look at
unreasonable CEO compensation, how long the team and board of directors have
been around for and insider trading.
TENURE AS CEO
Mr. Qizhi Wei has been Chairman and Chief Executive Officer of Dunxin Financial Holdings Ltd. since December 2017. Mr. Wei, graduating from Wuhan University with an MBA degree, was engaged in savings, credit, project evaluation and other credit management in the Hubei
Branch and Huanggang Branch of China Construction Bank in 19911992. He entered the Chinese capital market in 2001 through the creation of Hubei New
Nature Investment Co., Ltd. and serving as Chairman and General Manager. As one of the pioneers in China's first securities consulting business, he has been
focusing on the middle and longterm equity investment of highquality enterprises. Having built rich experience in the primary and secondary markets and
achieved remarkable investment results, he has a comprehensive and deep understanding of the macro and microeconomic environment. In March 2013, he led the creation of Hubei Chutian Microfinance Co., Ltd. and has served as Managing Director till now. By consistently upholding
the philosophy of "building a customerfriendly microfinance institution and growing together with corporate clients,” the Company was awarded as one of the
“Top 100 Most Competitive Microcredit Companies in China” for three consecutive years. It always focuses on the development of China's microcredit
industry, providing clients with the comprehensive and customized credit management services.
Key social honor: “2013 Top 10 Business Leaders of the Year in Huber”, “2015 Outstanding Hubei Merchants Award” and “2016 Outstanding Hubei
Key social positions: Vice President of China Microcredit Companies Association, member of the NPC Standing Committee in Wuchang District of
Wuhan, executive vice president of Hubei Merchants Association, founding president of EMBA Alumni Association of Wuhan University, founding member
of Anhui Project Center of SEE Foundation (China's famous nonprofit organization), executive president of Zhisland Hubei Branch and visiting professor of
School of Economics and Management of SouthCentral University for Nationalities.
Insufficient data for Qizhi to compare compensation growth.
Insufficient data for Qizhi to establish whether their remuneration is reasonable compared to companies of similar size in United States of America.
Management Team Tenure
Average tenure and age of the
Dunxin Financial Holdings
management team in years:
The average tenure for the Dunxin Financial Holdings management team is less than 2 years, this suggests a new team.
Should You Be Tempted To Buy Dunxin Financial Holdings Limited (NYSEMKT:DXF) Because Of Its PE Ratio?
The content of this article will benefit those of you who are starting to educate yourself about investing in the stock market. … and want to begin learning the link between Dunxin Financial Holdings Limited (NYSEMKT:DXF)’s fundamentals and stock market performance. … Dunxin Financial Holdings Limited (NYSEMKT:DXF) trades with a trailing P/E of 7.4x, which is lower than the industry average of 12.4x.
Dunxin Financial Holdings Limited engages in the microfinance lending business in Hubei, China. It provides consumer, commercial, collateral-backed, and enterprise loans that are secured by assets as collateral or guaranteed by a third party to individuals; micro, small, and medium sized enterprises; and sole proprietors. The company was formerly known as China Xiniya Fashion Limited and changed its name to Dunxin Financial Holdings Limited in March 2018. Dunxin Financial Holdings Limited is based in Wuhan, China.
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