china-dcf

china-dcf

Data Sources (Multi-Tier)

Tier 0 — Wind (most comprehensive paid data)

• Coverage: A-shares/Hong Kong and US stocks/funds/indices/bonds/macroeconomics/research reports/analysis (44 tools)
• MCP service:wind-mcp(requires WIND_API_KEY key, starting with ak_ )
• Advantages: broadest full-market coverage, most comprehensive data, includes research reports and quantitative analysis
• Key application:https://aifinmarket.wind.com.cn/#/home

Tier 1 — iFind (paid precise data)

ifind_get_stock_financials(ticker, ...)  -> Historical financials
ifind_get_stock_info(ticker)             -> Market data, shares outstanding
ifind_get_risk_indicators(ticker)        -> Beta, volatility for WACC

Tier 2 - AkShare (free, open-source, fallback)

get_financials(ticker, "income", "annual")     -> Historical P and L
get_financials(ticker, "balance", "annual")    -> Historical BS
get_quote(ticker)                              -> Market cap, price

Data source mode switch: When env var IFIND_DATA_SOURCE_MODE=ifind-only, use iFind exclusively.

• wind-only: Wind only, error if unavailable
• wind-fallback: Wind first, fallback to iFind → AkShare

Key differences from US-market DCF

Parameter	US DCF Convention	China DCF Convention
Risk-free rate	US 10Y Treasury	China 10Y CGB (government bond yield, ~2.5-3.5%)
Equity risk premium	~5-6% (historical US)	~6-8% (China A-share ERP)
Tax rate	US corporate 21%	China corporate 25% (high-tech enterprise 15%)
Terminal growth	US GDP growth (~2%)	China GDP growth (~4-5%)
Currency	USD	CNY
Reporting standard	US GAAP / IFRS	CAS (Chinese Accounting Standards)

Workflow

Step 1: Pull financials

get_financials(ticker, "income", "annual")   → last 5 years
get_financials(ticker, "balance", "annual")
get_financials(ticker, "cashflow", "annual")

Step 2: Get market data

get_quote(ticker)  → price, market cap, PE, PB
get_index_data("000001") → benchmark return for beta estimation

Step 3: Build projections

• Project revenue using historical growth rates adjusted for China macro outlook
• Assume 65-75% operating margin for baijiu / high-margin sectors
• Assume 15-25% operating margin for manufacturing
• CapEx as % of revenue: check historical from cashflow statement

Step 4: Compute WACC

WACC = E/(D+E) * Ke + D/(D+E) * Kd * (1 - tax_rate)

Ke = Rf + β * ERP
  Rf   = China 10Y CGB yield (use ak.bond_zh_us_rate() or web search for latest)
  β    = regression on 上证指数 returns (or use comparable firm beta)
  ERP  = 6-8% (China-specific equity risk premium)

Kd   = China 5Y corporate bond yield + credit spread

Step 5: Terminal value

Terminal Value = FCF_(n+1) / (WACC - g)
g = 3-4% for mature Chinese companies (China nominal GDP growth)

Notes

• Chinese fiscal year ends December 31 for most companies
• Northbound flow data can be used as sentiment indicator
• Goodwill impairments are common in China M&A — flag if goodwill > 30% of equity
• Some Chinese financial statements are reported in thousands of CNY vs CNY — check the unit