DCF Studio

    AIA.AX · ASX · Industrials

    Auckland International Airport Limited

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    AUD 0.48

    Market price

    AUD 6.66

    Implied upside

    -92.8%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case · NZD model at 0.8033

    Wrong toolThis model values the shares at 7.2% of the market price. A gap that size is a modelling failure rather than a view - most often an unusable beta, a currency or units mismatch, or a cashflow base that does not represent the business. Read the figures below as diagnostics, not as a call.
    AdjustedSome line items were not reported and have been derived. Each one is labelled in the workings below.
    AdjustedReports in NZD, trades in AUD. Modelled in NZD, converted at the end.
    AdjustedFree cashflow is negative in at least one forecast year, so terminal value carries most of the valuation.
    AdjustedCapital expenditure runs at 93.6% of revenue against depreciation of 22.8%. 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.

    Current EV/EBITDA of 21.2x 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
    AUD 0.48-92.8%
    Exit multiple
    AUD 7.18+7.8%
    Market price
    AUD 6.66

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (NZD). Outflows negative.

    -824210052-4121050260FY27FY28FY29FY30FY31
    Nominal FCFFDiscounted to todayNZD
    LineFY27FY28FY29FY30FY31CAGR
    RevenueNZD 1.1bnNZD 1.3bnNZD 1.6bnNZD 1.9bnNZD 2.2bn+17.8%
    EBITNZD 496.7mNZD 584.9mNZD 688.8mNZD 811.1mNZD 955.1m+17.8%
    NOPATNZD 372.9mNZD 439.1mNZD 517.1mNZD 608.9mNZD 717.0m+17.8%
    Add depreciation & amortisationNZD 259.7mNZD 305.8mNZD 360.0mNZD 424.0mNZD 499.3m+17.8%
    Less capital expenditureNZD -1.1bnNZD -1.3bnNZD -1.5bnNZD -1.7bnNZD -2.0bn+17.8%
    Less increase in working capitalNZD 3.2mNZD 3.8mNZD 4.5mNZD 5.3mNZD 6.2m-17.8%
    Free cashflow to firmNZD -428.6mNZD -504.8mNZD -594.4mNZD -699.9mNZD -824.2m-17.8%
    Discount factor0.96090.88730.81920.75640.6985-
    Present valueNZD -411.9mNZD -447.8mNZD -486.9mNZD -529.5mNZD -575.7m-8.7%
    Present Value Of The ForecastNZD -2.5bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.35%Australian Government 10-year (RBA F2)
    Equity risk premium6.00%Market assumption
    Beta0.667Reported 0.503, pulled toward 1.0 (Blume)
    Cost of equity9.35%Risk-free + beta x equity risk premium
    Cost of debt5.35%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationNZD 11.3bn80.4% of capital
    Total debtNZD 2.8bn19.6% of capital, book value as a proxy
    Tax rate24.9%Effective, capped at statutory
    WACC8.30%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 shareNZD 0.60

    166% of EV

    Forecast FCFF, final year
    NZD -824.2m
    Capex at depreciation, working capital in reinvestment
    NZD 717.0m
    Less reinvestment at g/ROIC (30.1% of NOPAT)
    NZD -215.9m
    Capitalised
    NZD 501.1m
    ROIC (WACC floor)
    8.3%
    Terminal value, undiscounted
    NZD 8.9bn
    Terminal value, discounted
    NZD 6.2bn
    Enterprise value
    NZD 3.7bn
    Less net debt
    NZD 2.7bn
    Equity value
    NZD 1.0bn

    Exit at 20.0x EBITDA

    Value per shareNZD 8.94

    114% of EV

    Terminal value, undiscounted
    NZD 29.1bn
    Terminal value, discounted
    NZD 20.3bn
    Enterprise value
    NZD 17.9bn
    Less net debt
    NZD 2.7bn
    Equity value
    NZD 15.2bn

    Spread between methods: 175%.

    Sensitivity

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

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    6.30%2.052.082.102.132.16
    7.30%1.201.221.241.261.28
    8.30%0.570.580.600.620.64
    9.30%0.080.100.110.130.14
    10.30%-0.30-0.28-0.27-0.26-0.25

    Outlined: this model. Green text: above today's price of 8.29. 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.

    InputModelImpliedGap
    Revenue growth, every year17.8%52.7%+34.9pp
    Discount rate8.3%3.3%-5.0pp
    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.