DCF Studio

    ANN.AX · ASX · Healthcare

    Ansell Limited

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    AUD 10.97

    Market price

    AUD 42.31

    Implied upside

    -74.1%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case · USD model at 1.4042

    AdjustedSome line items were not reported and have been derived. Each one is labelled in the workings below.
    AdjustedReports in USD, trades in AUD. Modelled in USD, converted at the end.

    Current EV/EBITDA of 20.2x 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 10.97-74.1%
    Exit multiple
    AUD 46.58+10.1%
    Market price
    AUD 42.31

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0m46m92mFY27FY28FY29FY30FY31
    Nominal FCFFDiscounted to todayUSD
    LineFY27FY28FY29FY30FY31CAGR
    RevenueUSD 2.3bnUSD 2.5bnUSD 2.8bnUSD 3.0bnUSD 3.3bn+8.9%
    EBITUSD 167.0mUSD 181.9mUSD 198.2mUSD 215.9mUSD 235.2m+8.9%
    NOPATUSD 122.7mUSD 133.7mUSD 145.6mUSD 158.7mUSD 172.8m+8.9%
    Add depreciation & amortisationUSD 93.6mUSD 101.9mUSD 111.0mUSD 121.0mUSD 131.8m+8.9%
    Less capital expenditureUSD -79.8mUSD -86.9mUSD -94.7mUSD -103.2mUSD -112.4m+8.9%
    Less increase in working capitalUSD -71.4mUSD -77.8mUSD -84.8mUSD -92.4mUSD -100.7m+8.9%
    Free cashflow to firmUSD 65.0mUSD 70.8mUSD 77.2mUSD 84.1mUSD 91.6m+8.9%
    Discount factor0.95750.87780.80470.73780.6764-
    Present valueUSD 62.3mUSD 62.2mUSD 62.1mUSD 62.0mUSD 62.0m-0.1%
    Present Value Of The ForecastUSD 310.5m

    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
    Beta0.731Reported 0.598, pulled toward 1.0 (Blume)
    Cost of equity9.73%Risk-free + beta x equity risk premium
    Cost of debt5.35%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationUSD 6.0bn88.7% of capital
    Total debtUSD 756.6m11.3% of capital, book value as a proxy
    Tax rate26.5%Effective, capped at statutory
    WACC9.08%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 shareUSD 7.81

    81% of EV

    Forecast FCFF, final year
    USD 91.6m
    Capex at depreciation, working capital in reinvestment
    USD 172.8m
    Less reinvestment at g/ROIC (27.5% of NOPAT)
    USD -47.6m
    Capitalised
    USD 125.2m
    ROIC (WACC floor)
    9.1%
    Terminal value, undiscounted
    USD 2.0bn
    Terminal value, discounted
    USD 1.3bn
    Enterprise value
    USD 1.6bn
    Less net debt
    USD 507.1m
    Equity value
    USD 1.1bn

    Exit at 20.0x EBITDA

    Value per shareUSD 33.17

    94% of EV

    Terminal value, undiscounted
    USD 7.3bn
    Terminal value, discounted
    USD 5.0bn
    Enterprise value
    USD 5.3bn
    Less net debt
    USD 507.1m
    Equity value
    USD 4.8bn

    Spread between methods: 124%.

    Sensitivity

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

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    7.08%11.4111.4711.5311.6011.66
    8.08%9.339.399.449.499.54
    9.08%7.737.777.817.867.90
    10.08%6.446.486.526.566.60
    11.08%5.405.445.475.505.54

    Outlined: this model. Green text: above today's price of 30.13. 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 year8.9%53.5%+44.6pp
    EBIT margin7.2%19.2%+12.1pp
    Discount rate9.1%3.8%-5.3pp
    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.