Hitachi

DCF to market -27.1% (tolerance 15.0%). the cost of capital (WACC, Valuation/WACC), set at the market-average required return with beta 1, against the steady state the price implies: DCF 27.1 per cent below the market: 16.10 trillion yen at the snapshot against a market capitalisation of 22.09 trillion; the market's enterprise value at the valuation date, 21.41 trillion, is 1.41 times the DCF's 15.23 trillion. Read as a steady state from FY2028 at the model's g of 1.9 per cent and RONIC of 12 per cent, the market's enterprise value implies a WACC of 5.88 per cent (Market-implied WACC) against the model's 8.17 per cent (the 2.817 per cent JGB yield plus Damodaran's 5.14 per cent premium): a WACC near 5.9 per cent closes the gap, 2.3 points below the yardstick. At the model'

Residual income to market -22.8% (tolerance 15.0%). the growth of residual operating income after the horizon (Market inputs/Long-run nominal GDP growth, 1.9 per cent): Residual income 22.8 per cent below the market: 17.04 trillion yen at the snapshot against 22.09 trillion. The continuing value lets the horizon's residual operating income, 753bn in FY2032, grow at the long-run nominal GDP growth of 1.9 per cent; the market's enterprise value at the model's 8.17 per cent WACC needs it to grow 4.23 per cent a year forever after FY2032 (Market-implied growth), and that growth in place of the GDP growth closes the gap. It is 2.3 points above Japan's nominal growth and below the forecast's own revenue growth at the horizon (4.5 per cent in FY2032), against revenu