Recently, two models such as the BYD Qin Plus have a starting price of 7As soon as the news of 890,000 yuan came out, it caused an uproar, and at the same time, it also set off a round of price reductions, and car brands such as Changan, Wuling, and Nezha also reduced prices.
Under normal circumstances, there is an inverse relationship between the demand for goods and **, that is, when the demand for goods decreases, the demand will rise, so there is a price reduction**.
But in economics,Veblen GoodsExceptsThis kind of product satisfies the vanity of the buyer and is a show off of wealth and statusIt is often that the more the price increases, the more people rush to it
Because of this, luxury brands such as LV, Dior, and YSL have raised prices many times, tooKweichow MoutaiThe secret to the development of this behemoth.
In fact, there is a similar phenomenon in many fields related to life safety, and the highest is more popular, such as imported drugs, intubation, etc.
The Bull Group's plug row is almost the highest on the market, but it can meet consumers' demands for high quality and safety, so that many people now recognize the bull plug rowThe market share is as high as 60%, almost reaching a monopoly position
Because of this, the profitability of the Bull Group is also strongROE greater than 25% for 8 consecutive years, the ROE in 2022 is as high as 2788%, far exceeding industry leaders such as Gree Electric (21%) and Midea Group (22%).
Its second growth curve, the intelligent electrical lighting business, is also relatively mature, contributing nearly half of the company's revenue, and is currently entering new energy products such as charging piles and charging guns.
So, is the current Bull Group's ** reasonable?
Today weDiscounted cash flow (DCF) modelCalculate the theoretical value of the Bull Group.
Discounted free cash flow formula).
With the DCF model mainlyThere are four key steps：1.Calculation of the Company's free cash flow for the 0th period (FCFF0); 2.**Free cash flow over the next 5 years; 3.Estimation of the growth rate (g); 4.Discount rate, calculation of weighted average cost of capital (WACC).
First, calculate the FCFF0 of the Bull Group.
Free cash flow = EBIT after taxes + depreciation and amortization - increase in working capital - capital expenditures.
After-tax profit before interest, we directly replace it with net profit, because for high-quality enterprises, interest expenses are basically negligible, or even negativeThis is still a plus for the FCFF
The data for 2023 has not yet been disclosed, so we will take 2022 as the 0th period, and the net profit of the Bull Group in 2022 is 318.5 billion yuan, depreciation and amortization amount of 26.6 billion yuan.
Working capital (current assets – current liabilities) in 2022 was 570.7 billion yuan, with a working capital of 47 in 2021$6.6 billion, so the increase in working capital in 2022 was 94.1 billion yuan.
For the purpose of calculation, cash is deducted from current assets and short-term borrowings are deducted from current liabilities. ）
The company's capital expenditure in 2022 was 101.9 billion yuan, according to the formula, calculatedBull Group's free cash flow in 2022 was 149.1 billion yuan
Secondly, the company's free cash flow for the next 5 years.
The average growth rate of net profit from 2016 to 2022 is 1615%，；From 2016 to 2022, the average revenue growth rate is 1798%。
Similarly, the depreciation and amortization ratio (depreciation and amortization revenue) from 2016 to 2022 averaged 179%；Working capital growth averaged 6%; The capex ratio averaged 536%。
So,It can be assumed that 2023-2027 and 2016-2022 will remain the same, the revenue growth rate is 1789%, and the net profit growth rate was 1615%, depreciation and amortization rate is taken as 179%, working capital growth rate of 6%, capital expenditure ratio of 536%。
Based on the above indicators, the free cash flow of Bull Group in the next five years is calculated to be 210.9 billion yuan, 239.2 billion yuan, 277.7 billion yuan, 318.6 billion and 365.3 billion yuan.
Then, estimate the perpetual growth rate of the Bull Group.
The sustainable growth rate is generally 5% and below, considering that Bull's electrical connection business and smart switch business are necessary for daily life and have strong customer stickiness, there are new and new ones every yearWe optimistically estimate the Bulls' perpetual growth rate at 25%
Finally, the weighted average cost of capital (WACC) for the Bull Group is calculated
WACC = Return on Equity * Ratio of Equity to Total Capital + Return on Debt (1 - Effective Tax Rate) * Ratio of Debt to Total Capital, representing the average cost of capital of the company.
Among them, the return on equity (RE) is calculated using the Capital Asset Pricing Model (CAPM).The risk-free rate of return (RF) is expressed in terms of the yield on a 10-year Treasury bond, with an optimistic estimate of 264%。
The expected market return (RM) is expressed in terms of the average yield of the 10-year CSI 300 Index, with an optimistic estimate of 878%；For Bulls Group over the last 24 months, it was 076。
The return on equity of the Bull Group is about 731%（2.64%+0.76(8.78%-2.64%)）
The Bull Group has a debt-to-capital ratio of approximately 5% and a debt cost (RD) of approximately 426% and an effective tax rate of 12%, so the WACC for Bull Group is calculated to be 713%。
By discounting the 2023-2027 detailed free cash flow, we can get a detailed enterprise value of 1131.7 billion yuanThe terminal period represents the stage of sustainable growth of the enterprise after 2028with a value of 8086.4 billion yuan.
Eventually, the two were added to the Bull GroupThe enterprise value is 921$8.1 billion
Enterprise value refers to the value of the company's core assets, which correspond to the main business and also represent all the company's investorsThere are both shareholders and creditors, the value generated by the day-to-day business activities of the jointly owned company.
And ** the market valuation of the company representsShareholder valueTherefore, to determine whether the company is currently overvalued or undervalued, we also have to calculate the equity value of the bull.
Enterprise Value + Non-Core Asset Value (Investment Assets) + Cash = Debt + Minority Equity Value + Equity Value.
The equity value of the Bull Group is 10294.8 billion yuan, with a total share capital of 89.2 billion, corresponding to a ** value of 11541 yuan. On February 26, 2024, the Bulls Group's ** was 1005 yuan,So the company is undervalued at the moment
Overall, Bull Group can be said to have no rivals in the field of sockets, with a market share of 60% and a steady first, and far less than the value calculated by the DCF method, which is still in the underestimation stage.
Although there are too many uncertainties in valuing with the DCF method, and almost every step is based on subjectivity, Warren Buffett said that as long as it is vaguely correct, it is not precisely wrong.
The above is only for the analysis of listed companies and does not constitute specific investment advice.
Follow Feijing Investment Research (ID: feijingtouyan) and get the most valuable "Growth 20: 20 Companies with the Most Growth Potential in 2024" investment report now!
**: Flying Whale Investment Research