<div id="readability-page-1"><div><h3>Key Insights</h3><ul><li> Using the 2 Stage Free Cash Flow to Equity, Dai Nippon Printing fair value estimate is JP¥3,680 </li> <li> Dai Nippon Printing is estimated to be 29% undervalued based on current share price of JP¥2,607 </li> <li>  Analyst price target for 7912 is JP¥2,673 which is 27% below our fair value estimate </li> </ul><p>Does the November share price for Dai Nippon Printing Co., Ltd. (TSE:7912) reflect what it's really worth? Today, we will estimate the stock's intrinsic value  by estimating the company's future cash flows and discounting them to their present value.  The Discounted Cash Flow (DCF) model is the tool we will apply to do this.  Before you think you won't be able to understand it, just read on! It's actually much less complex than you'd imagine.</p><p> We generally believe that a company's value is the present value of all of the cash it will generate in the future. However, a DCF is just one valuation metric among many, and it is not without flaws.  Anyone interested in learning a bit more about intrinsic value should have a read of the Simply Wall St analysis model. </p><p>This technology could replace computers: discover the 20 stocks are working to make quantum computing a reality.</p><h2> Step By Step Through The Calculation </h2> <p> We use what is known as a 2-stage model, which simply means we have two different periods of growth rates for the company's cash flows. Generally the first stage is higher growth, and the second stage is a lower growth phase.  In the first stage we need to estimate the cash flows to the business over the next ten years.   Where possible we use analyst estimates, but when these aren't available we extrapolate the previous free cash flow (FCF) from the last estimate or reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. We do this to reflect that growth tends to slow more in the early years than it does in later years.  </p><p> Generally we assume that a dollar today is more valuable than a dollar in the future,  and so the sum of these future cash flows is then discounted to today's value: </p><h4> 10-year free cash flow (FCF) estimate </h4><table><tbody><tr><td> </td><td><strong>2026</strong></td><td><strong>2027</strong></td><td><strong>2028</strong></td><td><strong>2029</strong></td><td><strong>2030</strong></td><td><strong>2031</strong></td><td><strong>2032</strong></td><td><strong>2033</strong></td><td><strong>2034</strong></td><td><strong>2035</strong></td></tr><tr><td><strong> Levered FCF (¥, Millions) </strong></td><td>JP¥114.5b</td><td>JP¥91.7b</td><td>JP¥78.6b</td><td>JP¥88.0b</td><td>JP¥82.0b</td><td>JP¥78.3b</td><td>JP¥75.9b</td><td>JP¥74.5b</td><td>JP¥73.6b</td><td>JP¥73.1b</td></tr><tr><td><strong>Growth Rate Estimate Source</strong></td><td>Analyst x3</td><td>Analyst x4</td><td>Analyst x3</td><td>Analyst x1</td><td>Est @ -6.77%</td><td>Est @ -4.56%</td><td>Est @ -3.01%</td><td>Est @ -1.93%</td><td>Est @ -1.17%</td><td>Est @ -0.64%</td></tr><tr><td><strong> Present Value (¥, Millions) Discounted @ 5.2% </strong></td><td>JP¥108.9k</td><td>JP¥82.9k</td><td>JP¥67.6k</td><td>JP¥72.0k</td><td>JP¥63.8k</td><td>JP¥57.9k</td><td>JP¥53.4k</td><td>JP¥49.8k</td><td>JP¥46.8k</td><td>JP¥44.2k</td></tr></tbody></table><p><i>(&#34;Est&#34; = FCF growth rate estimated by Simply Wall St)</i><br/><strong>Present Value of 10-year Cash Flow (PVCF)</strong> = JP¥647b</p><p> After calculating the present value of future cash flows in the initial 10-year period, we need to calculate the Terminal Value, which accounts for all future cash flows beyond the first stage.  The Gordon Growth formula is used to calculate Terminal Value at a future annual growth rate equal to the 5-year average of the 10-year government bond yield of 0.6%. We discount the terminal cash flows to today's value at a cost of equity of 5.2%. </p><p><strong>Terminal Value (TV)</strong>= FCF<sub>2035</sub> × (1 + g) ÷ (r – g) = JP¥73b× (1 + 0.6%) ÷ (5.2%– 0.6%) = JP¥1.6t</p><p><strong>Present Value of Terminal Value (PVTV)</strong>= TV / (1 + r)<sup>10</sup>= JP¥1.6t÷ ( 1 + 5.2%)<sup>10</sup>= JP¥976b</p><p> The total value, or equity value, is then the sum of the present value of the future cash flows,  which in this case is JP¥1.6t.  In the final step we divide the equity value by the number of shares outstanding.  Relative to the current share price of JP¥2.6k, the company appears   a touch undervalued    at a 29% discount to where the stock price trades currently.   The assumptions in any calculation have a big impact on the valuation, so it is better to view this as a rough estimate, not precise down to the last cent. </p><figure><img height="760" src="https://imageproxy.pbkrs.com/https://images.simplywall.st/asset/chart/874054-dcf-1-dark-2/1762466306590?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="1706" original-src="https://imageproxy.pbkrs.com/https://images.simplywall.st/asset/chart/874054-dcf-1-dark-2/1762466306590"/><figcaption>TSE:7912 Discounted Cash Flow November 6th 2025</figcaption></figure> <h2> Important Assumptions </h2><p> Now the most important inputs to a discounted cash flow are the discount rate, and of course, the actual cash flows.  If you don't agree with these result, have a go at the calculation yourself and play with the assumptions.  The DCF also does not consider the possible cyclicality of an industry, or a company's future capital requirements, so it does not give a full picture of a company's potential performance.  Given that we are looking at Dai Nippon Printing as potential shareholders, the cost of equity is used as the discount rate, rather than the cost of capital (or weighted average cost of capital, WACC) which accounts for debt.  In this calculation we've used 5.2%, which is based on a levered beta of 0.868. Beta is a measure of a stock's volatility, compared to the market as a whole. We get our beta from the industry average beta of globally comparable companies, with an imposed limit between 0.8 and 2.0, which is a reasonable range for a stable business. </p> <p><span> See our latest analysis for Dai Nippon Printing </span></p><h3>SWOT Analysis for Dai Nippon Printing</h3><div><div><p><strong>Strength</strong></p><ul><li>Debt is not viewed as a risk.</li></ul> <ul><li>Dividends are covered by earnings and cash flows.</li></ul> <ul> Dividend information for 7912.</ul> </div><div><p><strong>Weakness</strong></p><ul><li>Earnings declined over the past year.</li></ul> <ul><li>Dividend is low compared to the top 25% of dividend payers in the Commercial Services market.</li></ul></div><div><p><strong>Opportunity</strong></p><ul><li>Good value based on P/E ratio and estimated fair value.</li></ul> </div><div><p><strong>Threat</strong></p><ul><li>Annual earnings are forecast to decline for the next 3 years.</li></ul> <ul> What else are analysts forecasting for 7912?</ul> </div></div><h2> Looking Ahead: </h2><p> Whilst important, the DCF calculation  ideally won't be the sole piece of analysis you scrutinize for a company.  It's not possible to obtain a foolproof valuation with a DCF model.  Preferably you'd apply different cases and assumptions and see how they would impact the company's valuation.  If a company grows at a different rate, or if its cost of equity or risk free rate changes sharply, the output can look very different.   Why is the intrinsic value higher than the current share price?   For Dai Nippon Printing, we've put together three  pertinent  factors  you should consider: </p><ol> <li> <strong>Risks</strong>: You should be aware of the <strong>1 warning sign for Dai Nippon Printing</strong> we've uncovered before considering an investment in the company. </li> <li><strong>Future Earnings</strong>: How does 7912's growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with our free analyst growth expectation chart.</li><li> <strong>Other Solid Businesses</strong>: Low debt, high returns on equity and good past performance are fundamental to a strong business. Why not explore our interactive list of stocks with solid business fundamentals to see if there are other companies you may not have considered! </li> </ol><p>PS. The Simply Wall St app conducts a discounted cash flow valuation for every stock on the TSE every day. If you want to find the calculation for other stocks just search here.</p></div></div>

DNPLY

<p>Dai Nippon Printing Co., Ltd. (TSE:7912) is estimated to be 29% undervalued, with a fair value of JP¥3,680 compared to the current share price of JP¥2,607. Analysts have set a price target of JP¥2,673, which is 27% below the fair value estimate. The valuation is based on a Discounted Cash Flow (DCF) model, which considers future cash flows and their present value. The analysis suggests that the stock is trading at a discount, but emphasizes that the DCF model has limitations and should be viewed as a rough estimate.</p>

Is Dai Nippon Printing Co., Ltd. (TSE:7912) Trading At A 29% Discount?