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    ALK.AX · ASX · Basic Materials

    Alkane Resources Ltd

    Also onConsensus Drift

    Implied value per share

    AUD 1.07

    Market price

    AUD 1.97

    Implied upside

    -45.8%

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

    Wrong toolThis line has no market capitalisation, which means it is not ordinary shares - typically a hybrid, preference line, note or unlisted stub. A discounted cashflow values a claim on the whole business, so applying it here attributes all of the group’s revenue to a security that has no such claim. Its value is its coupon and call schedule. Look up the ordinary line instead.
    AdjustedSome line items were not reported and have been derived. Each one is labelled in the workings below.
    AdjustedOnly 3 year(s) of history available to anchor assumptions on.
    AdjustedFree cashflow is negative in at least one forecast year, so terminal value carries most of the valuation.
    AdjustedCapital expenditure runs at 59.0% of revenue against depreciation of 20.4%. 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.

    No usable EV/EBITDA (EBITDA is not positive), so the exit multiple falls back to 8x.

    Value Per Share

    Perpetuity growth
    AUD 1.07-45.8%
    Exit multiple
    AUD 0.64-67.4%
    Market price
    AUD 1.97

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (AUD). Outflows negative.

    -40408735-202043670FY25FY26FY27FY28FY29
    Nominal FCFFDiscounted to todayAUD
    LineFY25FY26FY27FY28FY29CAGR
    RevenueAUD 177.1mAUD 181.4mAUD 185.7mAUD 190.1mAUD 194.7m+2.4%
    EBITAUD 45.0mAUD 46.1mAUD 47.2mAUD 48.3mAUD 49.5m+2.4%
    NOPATAUD 31.6mAUD 32.3mAUD 33.1mAUD 33.9mAUD 34.7m+2.4%
    Add depreciation & amortisationAUD 36.1mAUD 37.0mAUD 37.8mAUD 38.7mAUD 39.7m+2.4%
    Less capital expenditureAUD -104.6mAUD -107.1mAUD -109.6mAUD -112.3mAUD -114.9m+2.4%
    Less increase in working capitalAUD 163.8kAUD 167.7kAUD 171.7kAUD 175.8kAUD 180.0k-2.4%
    Free cashflow to firmAUD -36.8mAUD -37.6mAUD -38.5mAUD -39.5mAUD -40.4m-2.4%
    Discount factor0.97470.92600.87980.83580.7941-
    Present valueAUD -35.8mAUD -34.9mAUD -33.9mAUD -33.0mAUD -32.1m+2.7%
    Present Value Of The ForecastAUD -169.7m

    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
    Beta1.377Reported 1.563, pulled toward 1.0 (Blume)
    Cost of equity13.61%Risk-free + beta x equity risk premium
    Cost of debt7.50%Interest expense / average total debt
    Market capitalisationAUD 0.000.0% of capital
    Total debtAUD 49.0m100.0% of capital, book value as a proxy
    Tax rate29.9%Effective, capped at statutory
    WACC5.26%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 shareAUD 1.07

    126% of EV

    Forecast FCFF, final year
    AUD -40.4m
    Capex at depreciation, working capital in reinvestment
    AUD 34.7m
    Less reinvestment at g/ROIC (19.3% of NOPAT)
    AUD -6.7m
    Capitalised
    AUD 28.0m
    ROIC (reported)
    12.9%
    Terminal value, undiscounted
    AUD 1.0bn
    Terminal value, discounted
    AUD 826.0m
    Enterprise value
    AUD 656.3m
    Less net debt
    AUD 3.5m
    Equity value
    AUD 652.8m

    Exit at 8.0x EBITDA

    Value per shareAUD 0.64

    143% of EV

    Terminal value, undiscounted
    AUD 713.3m
    Terminal value, discounted
    AUD 566.5m
    Enterprise value
    AUD 396.8m
    Less net debt
    AUD 3.5m
    Equity value
    AUD 393.3m

    Spread between methods: 50%.

    Sensitivity

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

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    3.26%2.213.075.0714.83—
    4.26%1.241.511.922.674.40
    5.26%0.790.911.071.301.65
    6.26%0.540.600.670.770.90
    7.26%0.370.410.450.500.56

    Outlined: this model. Green text: above today's price of 1.97. 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 year2.4%14.5%+12.1pp
    EBIT margin25.4%39.9%+14.4pp
    Discount rate5.3%4.2%-1.0pp
    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.