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Guangdong Investment Limited

Intrinsic Value Analysis (Discounted Cash Flow)Industry: Regulated WaterSector: Utilities

Fair Value Summary

Current Price$6.99
5Y Range12.40 – 26.04
5Y Selected19.22
(-) Safety Margin82.37%
5Y Buy Price$4.08
Upside (to Buy Price)-41.62%
10Y Range13.09 – 26.51
10Y Selected19.80
(-) Safety Margin82.37%
10Y Buy Price$4.20
Upside (to Buy Price)-39.87%

Company Predictability & Safety

MetricValue
Revenue R2 (5Y)0.3450
Revenue R2 (10Y)0.6079
Net Income R2 (5Y)0.6579
Net Income R2 (10Y)0.2083
EBITDA R2 (5Y)0.3895
EBITDA R2 (10Y)0.5813
FCF R2 (5Y)0.5266
FCF R2 (10Y)0.0025
Safety Score0.2123

DA 10-Year Projection

Metric2025202620272028202920302031203220332034
% Growth1.03%1.36%1.69%2.02%2.35%2.68%3.01%3.34%3.67%4.00%
Revenue18,695.8718,950.1219,270.3619,659.6020,121.5920,660.8421,282.7221,993.5622,800.7223,712.75
EBITDA7,586.387,689.557,819.497,977.448,164.908,383.728,636.068,924.519,252.049,622.12
D&A-1,555.59-1,576.74-1,603.39-1,635.78-1,674.22-1,719.08-1,770.83-1,829.97-1,897.13-1,973.02
EBIT6,030.796,112.806,216.106,341.666,490.696,664.636,865.247,094.537,354.907,649.10
Pro forma Taxes-1,582.52-1,604.04-1,631.15-1,664.09-1,703.20-1,748.84-1,801.48-1,861.65-1,929.98-2,007.17
NOPAT4,448.274,508.764,584.964,677.574,787.494,915.795,063.755,232.885,424.935,641.92
Capital Expenditures-1,696.65-1,719.73-1,748.79-1,784.11-1,826.04-1,874.97-1,931.41-1,995.92-2,069.17-2,151.93
NWC Investment-20.80-27.75-34.96-42.49-50.43-58.87-67.89-77.60-88.11-99.56
(+) D&A1,555.591,576.741,603.391,635.781,674.221,719.081,770.831,829.971,897.131,973.02
Free Cash Flow4,286.404,338.034,404.604,486.744,585.244,701.034,835.284,989.345,164.785,363.45
Diluted Shares Outstanding6,537,821,440.006,537,821,440.006,537,821,440.006,537,821,440.006,537,821,440.006,537,821,440.006,537,821,440.006,537,821,440.006,537,821,440.006,537,821,440.00

Discounting Periods

MetricDec-25Dec-26Dec-27Dec-28Dec-29Dec-30Dec-31Dec-32Dec-33Dec-34
Period Start6/30/251/1/261/1/271/1/281/1/291/1/301/1/311/1/321/1/331/1/34
Period End12/31/2512/31/2612/31/2712/31/2812/31/2912/31/3012/31/3112/31/3212/31/3312/31/34
Mid-Point9/30/257/2/267/2/277/1/287/2/297/2/307/2/317/1/327/2/337/2/34
Time (t)0.100.451.452.463.464.465.466.467.468.46
Valuation Date1/17/26

Base Case Projected Flows

WACC: 6.32%Terminal Growth: 2.30%
Metric2025202620272028202920302031203220332034TV (5y)TV (10y)
Discount Factor0.990.970.910.860.810.760.720.670.630.60
PV UFCF4,260.214,220.024,030.063,858.803,709.083,576.683,460.123,358.113,269.543,193.46
Raw: 116,786.82
91,619.82
Raw: 136,608.04
78,883.37

Base Case Valuation

5-Year Horizon10-Year Horizon
UFCFUFCF
Enterprise Value111,697.99115,819.47
(-) Net Debt2,670.892,670.89
Equity Value109,027.09113,148.57
(/) Shares Out6,537.826,537.82
Fair Value$16.68$17.31
(-) Safety Margin82.37%82.37%
Buy Price$2.94$3.05
Current Price$6.99$6.99
Upside (to Buy Price)-57.94%-56.35%

Conservative Projected Flows

WACC: 7.32%Terminal Growth: 1.80%
Metric2025202620272028202920302031203220332034TV (5y)TV (10y)
Discount Factor0.990.970.900.840.780.730.680.630.590.55
PV UFCF4,256.234,202.283,975.723,770.953,590.863,430.423,287.713,161.053,049.002,950.30
Raw: 84,616.21
63,965.99
Raw: 98,977.39
52,555.33

Conservative Valuation

5-Year Horizon10-Year Horizon
UFCFUFCF
Enterprise Value83,762.0388,229.85
(-) Net Debt2,670.892,670.89
Equity Value81,091.1385,558.95
(/) Shares Out6,537.826,537.82
Fair Value$12.40$13.09
(-) Safety Margin82.37%82.37%
Buy Price$2.19$2.31
Current Price$6.99$6.99
Upside (to Buy Price)-68.72%-66.99%

Aggressive Projected Flows

WACC: 5.32%Terminal Growth: 2.80%
Metric2025202620272028202920302031203220332034TV (5y)TV (10y)
Discount Factor0.990.980.930.880.840.790.750.720.680.64
PV UFCF4,264.244,238.004,085.663,949.563,832.363,730.653,643.343,569.503,508.353,459.25
Raw: 187,307.28
152,546.58
Raw: 219,097.33
137,695.26

Aggressive Valuation

5-Year Horizon10-Year Horizon
UFCFUFCF
Enterprise Value172,916.40175,976.19
(-) Net Debt2,670.892,670.89
Equity Value170,245.50173,305.29
(/) Shares Out6,537.826,537.82
Fair Value$26.04$26.51
(-) Safety Margin82.37%82.37%
Buy Price$4.59$4.67
Current Price$6.99$6.99
Upside (to Buy Price)-34.32%-33.14%

Reverse DCF: Market Implied Growth

Current Price$6.99
WACC Used6.3%
IMPLIED REVENUE GROWTH95.09%
Metric2027202820292030203120322033203420352036
Implied Revenue79,527.86155,153.10302,692.49590,531.181,152,083.662,247,631.964,384,967.538,554,754.7816,689,708.3532,560,414.91
Constant Implied Growth95.09%95.09%95.09%95.09%95.09%95.09%95.09%95.09%95.09%95.09%
Implied Free Cash Flow7.9515.5230.2759.05115.21224.76438.50855.481,668.973,256.04
Discount Factor0.960.860.810.760.720.670.630.600.560.53
Present Value of Implied FCF7.6213.3424.4944.9382.44151.28277.59509.36934.651,715.04

Rolling Historical DCF (Backtest)

Valuation based on actual realized growth.
YearValuation DateActual PriceRealized Growth (5Y)Calculated Fair ValueValuation Delta
20192019-12-31$16.30-6.55%$8.06-50.57%
20182018-12-31$15.147.44%$18.0118.97%
20172017-12-31$10.4416.80%$22.48115.33%
20162016-12-31$10.2423.11%$34.92240.98%
20152015-12-31$10.9818.08%$20.9891.11%
20142014-12-31$10.0813.10%$21.08109.14%
20132013-12-31$7.5810.80%$18.16139.63%
20122012-12-31$6.099.85%$16.57172.04%
20112011-12-31$4.717.30%$14.60210.06%
20102010-12-31$4.045.72%$11.25178.37%
20092009-12-31$4.536.66%$12.02165.32%
20082008-12-31$3.117.80%$12.00285.75%
20072007-12-31$4.451.93%$9.76119.35%
20062006-12-31$3.51-0.97%$7.77121.46%
20052005-12-31$2.90-1.04%$7.27150.81%
20042004-12-31$2.604.29%$10.03285.81%
20032003-12-31$1.568.54%$7.10355.35%
20022002-12-31$0.974.06%$5.80498.18%
20012001-12-31$0.77-6.17%$4.98547.27%
20002000-12-31$0.90-8.61%$2.83214.46%
19991999-12-31$1.13-3.73%$5.76409.44%
19981998-12-31$1.13-14.13%$3.48208.32%
19971997-12-31$1.13-20.53%$-3.71-428.52%
19961996-12-31$1.13-29.71%$-3.34-395.90%
19951995-12-31$1.13-25.05%$-2.95-360.64%

Monte Carlo Simulation (1,000 Iterations)

Mean Fair Value
$18.77
Median
$17.04
10th Percentile
$13.08
90th Percentile
$26.92

Fair Value Distribution

$9.70 - $15.86
375
$15.86 - $22.03
427
$22.03 - $28.19
119
$28.19 - $34.36
50
$34.36 - $40.52
17
$40.52 - $46.68
7
$46.68 - $52.85
2
$52.85 - $59.01
0
$59.01 - $65.18
2
$65.18 - $71.34
0
$71.34 - $77.51
0
$77.51 - $83.67
0
$83.67 - $89.83
0
$89.83 - $96.00
0
$96.00 - $102.16
0
$102.16 - $108.33
0
$108.33 - $114.49
0
$114.49 - $120.66
0
$120.66 - $126.82
0
$126.82 - $132.99
1