DCF Tool

MOMO

Hello Group Inc – Software Publishers
Momo is a leading player in China's online social and entertainment space. Through Momo, Tantan and other properties within its product portfolio, it enables users to discover new relationships, expand their social connections and build meaningful interactions. Momo is a mobile application that connects people and facilitates interactions based on location, interests and a variety of recreational activities including live talent shows, short videos, social games as well as other video- and audio-based interactive experiences, such as live chats and mobile karaoke experience. Tantan, which was added into its family of applications through acquisition in May 2018, is a leading social and dating application for the younger generation. Tantan is designed to help its users find and establish romantic connections as well as meet interesting people.
Analysis Results
Intrinsic Value $118.42
Latest Price $5.38
Relative Value 95% undervalued
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Cash Flow (Millions)
Analysis Parameters
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Analysis Details
Growth Rate Projection

An exponential growth model was fit to the past cash flow data, giving more weight to more recent years. This model determined a growth rate estimate of 13.1%.

Weighted Average Cost of Capital (WACC)

The calculated WACC is 3.9%. This value is used as the default discount rate.

Value of Future Flows

Assuming a growth rate of 13.1%, the cash flows for the next 5 years are projected.

The present value of each year's flow is adjusted to present value using the discount rate.

Year Future flow (million) Present value (million)
2022 419 403
2023 474 438
2024 536 477
2025 606 520
2026 686 566
Terminal Value

Assuming the company was sold after the projection period at an exit multiple of 30, the terminal value of the company would be 20600 million. This corresponds to a present value of 16300 million.

Intrinsic Value Per Share

The total present value of the projected cash flows is 2400 million. Adding in the terminal value gives a total present value of 18700 million.

There are presently 158.0 million outstanding shares, so the intrinsic value per share is 118.42.

Financial Statements

The following data was to determine the past cash flows.

Current Assets 1,476,653,434
Current Cash 1,322,835,511
Current Liabilities 394,747,454
Current Debt 0
Non-Cash Working Capital (NCWC) -240,929,531
Change in NCWC 19,248,757
EBIT 313,718,755
Tax Provision 129,066,859
Depreciation and Amortization 41,518,099
Capital Expenditure -14,957,085
Unlevered Free Cash Flow 359,528,526
Current Assets 1,797,721,102
Current Cash 1,672,741,073
Current Liabilities 385,158,318
Current Debt 0
Non-Cash Working Capital (NCWC) -260,178,289
Change in NCWC -11,096,538
EBIT 380,899,713
Tax Provision 115,639,012
Depreciation and Amortization 56,050,074
Capital Expenditure -18,998,668
Unlevered Free Cash Flow 306,079,290
Current Assets 2,263,217,740
Current Cash 2,138,758,759
Current Liabilities 373,540,732
Current Debt 0
Non-Cash Working Capital (NCWC) -249,081,751
Change in NCWC -51,990,670
EBIT 506,032,671
Tax Provision 126,646,270
Depreciation and Amortization 51,041,197
Capital Expenditure -26,728,093
Unlevered Free Cash Flow 362,026,804
Current Assets 1,836,625,571
Current Cash 1,641,730,609
Current Liabilities 391,986,043
Current Debt 0
Non-Cash Working Capital (NCWC) -197,091,080
Change in NCWC -64,502,080
EBIT 481,929,490
Tax Provision 101,715,199
Depreciation and Amortization 35,075,670
Capital Expenditure -35,304,644
Unlevered Free Cash Flow 320,534,974
Current Assets 1,188,692,000
Current Cash 1,061,235,000
Current Liabilities 260,046,000
Current Debt 0
Non-Cash Working Capital (NCWC) -132,589,000
Change in NCWC -67,722,000
EBIT 366,755,000
Tax Provision 65,980,000
Depreciation and Amortization 12,436,000
Capital Expenditure -35,307,000
Unlevered Free Cash Flow 213,145,742
Current Assets 720,153,000
Current Cash 651,323,000
Current Liabilities 133,697,000
Current Debt 0
Non-Cash Working Capital (NCWC) -64,867,000
Change in NCWC -27,290,000
EBIT 147,957,000
Tax Provision 5,136,000
Depreciation and Amortization 8,404,000
Capital Expenditure -7,026,000
Unlevered Free Cash Flow 116,991,955
Current Assets 503,837,000
Current Cash 469,469,000
Current Liabilities 71,945,000
Current Debt 0
Non-Cash Working Capital (NCWC) -37,577,000
Change in NCWC -14,511,000
EBIT 5,984,000
Tax Provision 92,000
Depreciation and Amortization 6,646,000
Capital Expenditure -13,521,000
Unlevered Free Cash Flow -15,441,925

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