China Hongqiao Group Limited (HKG:1378) Shares Could Be 45% Below Their Intrinsic Value Estimate

The projected fair value for China Hongqiao Group is HK$65.71 based on 2 Stage Free Cash Flow to Equity. Current share price of HK$36.12 suggests China Hongqiao Group is potentially 45% undervalued. The CN¥38.29 analyst price target for 1378 is 42% less than our estimate of fair value. We use a 2-stage DCF model to estimate the intrinsic value. The model suggests a total equity value of CN¥581b, which translates to a fair value of HK$65.71 per share, a 45% discount to the current price. Key assumptions include a 9.0% discount rate and future cash flow estimates based on analyst projections and our own extrapolations. The analysis also includes a SWOT analysis, highlighting earnings growth and a strong balance sheet as strengths, while slower future growth compared to the Hong Kong market is a threat.