A17U.SI · SES · Real Estate

CapitaLand Ascendas REIT

Also onConsensus Drift

Implied value per share

SGD 2.03

Market price

SGD 2.34

Implied upside

-13.1%

5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case

AdjustedSome line items were not reported and have been derived. Each one is labelled in the workings below.

AdjustedReported capital expenditure averages just 0.00% of revenue, which is too low to be the company's real investment - property trusts and similar structures invest through lines that are not reported as capex. Capex has been set to 1.00% of revenue so the forecast is not handed free growth. The accounts do not separate depreciation from amortisation, so the combined charge is used - if a large part of it is amortisation of an acquisition, the reported capex is probably right and this substitution is not. Override it if the reported figure is right.

AdjustedCapital expenditure runs at 1.0% of revenue against depreciation of 0.0%. A perpetuity has to be a steady state, so the terminal year uses maintenance capex at depreciation and then charges the reinvestment terminal growth requires (g/ROIC of NOPAT). The bridge is shown under Terminal Value.

NoteRisk-free rate is an assumption: USD assumption - no free live source available for this market.

Current EV/EBITDA of 20.1x sits outside a defensible 3-20x band, so the exit multiple is capped at 20.0x. A multiple that far out usually means EBITDA is the wrong denominator for this business.

Value Per Share

Perpetuity growth

SGD 2.03-13.1%

Exit multiple

SGD 3.21+37.3%

Market price

SGD 2.34

Same forecast, different terminal treatment. Percentages vs price.

Assumptions

Discount rate (WACC)6.69%Growth after the forecast2.50%Exit EV/EBITDA20.0xTax rate8.33%Capex, % of revenue1.00%Depreciation, % of revenue0.00%Working capital, % of revenue growth-33.40%

Forecast Cashflows

Reporting currency (SGD). Outflows negative.

Nominal FCFFDiscounted to todaySGD

Line	FY26	FY27	FY28	FY29	FY30	CAGR
Revenue	SGD 1.6bn	SGD 1.7bn	SGD 1.8bn	SGD 1.8bn	SGD 1.9bn	+4.4%
EBIT	SGD 1.0bn	SGD 1.1bn	SGD 1.1bn	SGD 1.1bn	SGD 1.2bn	+4.4%
NOPAT	SGD 925.5m	SGD 966.1m	SGD 1.0bn	SGD 1.1bn	SGD 1.1bn	+4.4%
Add depreciation & amortisation	SGD 0.00	SGD 0.00	SGD 0.00	SGD 0.00	SGD 0.00	-
Less capital expenditure	SGD -16.1m	SGD -16.8m	SGD -17.5m	SGD -18.3m	SGD -19.1m	+4.4%
Less increase in working capital	SGD 22.5m	SGD 23.5m	SGD 24.6m	SGD 25.6m	SGD 26.8m	-4.4%
Free cashflow to firm	SGD 932.0m	SGD 972.8m	SGD 1.0bn	SGD 1.1bn	SGD 1.1bn	+4.4%
Discount factor	0.9682	0.9075	0.8506	0.7973	0.7473	-
Present value	SGD 902.3m	SGD 882.8m	SGD 863.8m	SGD 845.2m	SGD 826.9m	-2.2%
Present Value Of The Forecast	SGD 4.3bn

Discount Rate

Source shown per component. All overridable above.

Risk-free rate	4.20%	USD assumption - no free live source available for this market (assumption)
Equity risk premium	6.50%	Market assumption
Beta	0.678	Reported 0.520, pulled toward 1.0 (Blume)
Cost of equity	8.61%	Risk-free + beta x equity risk premium
Cost of debt	4.20%	Floored at the risk-free rate (implied cost of debt was lower)
Market capitalisation	SGD 11.7bn	59.6% of capital
Total debt	SGD 7.9bn	40.4% of capital, book value as a proxy
Tax rate	8.3%	Effective, capped at statutory
WACC	6.69%	E/V x Re + D/V x Rd x (1 - t)

Terminal Value

Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

Perpetuity growth at 2.50%

Value per shareSGD 2.03

74% of EV

Forecast FCFF, final year: SGD 1.1bn
Capex at depreciation, working capital in reinvestment: SGD 1.1bn
Less reinvestment at g/ROIC (37.4% of NOPAT): SGD -410.8m
Capitalised: SGD 688.0m
ROIC (WACC floor): 6.7%

Terminal value, undiscounted: SGD 16.8bn
Terminal value, discounted: SGD 12.6bn
Enterprise value: SGD 16.9bn
Less net debt: SGD 7.7bn
Equity value: SGD 9.2bn

Exit at 20.0x EBITDA

Value per shareSGD 3.21

81% of EV

Terminal value, undiscounted: SGD 24.0bn
Terminal value, discounted: SGD 17.9bn
Enterprise value: SGD 22.2bn
Less net debt: SGD 7.7bn
Equity value: SGD 14.5bn

Spread between methods: 45%.

Sensitivity

Value per share (SGD) by discount rate and long-run growth.

Long-run growth
Discount rate	1.50%	2.00%	2.50%	3.00%	3.50%
4.69%	3.69	3.77	3.89	4.06	4.35
5.69%	2.66	2.67	2.69	2.71	2.72
6.69%	2.01	2.02	2.03	2.05	2.06
7.69%	1.53	1.54	1.55	1.56	1.57
8.69%	1.16	1.17	1.18	1.19	1.20

Outlined: this model. Green text: above today's price of 2.34. Shading: distance from this model's own value.

Priced In

What each input would have to be to justify the current price, one at a time.

Input	Model	Implied	Gap
Revenue growth, every year	4.4%	6.2%	+1.8pp
EBIT margin	62.9%	68.0%	+5.1pp
Discount rate	6.7%	6.2%	-0.5pp

Download as Excel

Live formulas, not pasted numbers - edit a driver and the workbook reprices.

Yahoo Finance and RBA data. General information, not advice. Methodology.