DCF Studio

    APA.AX · ASX · Utilities

    APA Group

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    AUD 0.11

    Market price

    AUD 10.93

    Implied upside

    -99.0%

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

    Wrong toolThis model values the shares at 1.0% 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.

    Value Per Share

    Perpetuity growth
    AUD 0.11-99.0%
    Exit multiple
    AUD 7.79-28.7%
    Market price
    AUD 10.93

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (AUD). Outflows negative.

    0m339m678mFY27FY28FY29FY30FY31
    Nominal FCFFDiscounted to todayAUD
    LineFY27FY28FY29FY30FY31CAGR
    RevenueAUD 3.1bnAUD 3.1bnAUD 3.2bnAUD 3.3bnAUD 3.3bn+2.0%
    EBITAUD 1.0bnAUD 1.0bnAUD 1.1bnAUD 1.1bnAUD 1.1bn+2.0%
    NOPATAUD 710.2mAUD 724.5mAUD 739.1mAUD 754.0mAUD 769.1m+2.0%
    Add depreciation & amortisationAUD 941.4mAUD 960.3mAUD 979.7mAUD 999.4mAUD 1.0bn+2.0%
    Less capital expenditureAUD -1.0bnAUD -1.1bnAUD -1.1bnAUD -1.1bnAUD -1.1bn+2.0%
    Less increase in working capitalAUD 20.8mAUD 21.3mAUD 21.7mAUD 22.1mAUD 22.6m-2.0%
    Free cashflow to firmAUD 626.2mAUD 638.8mAUD 651.7mAUD 664.8mAUD 678.2m+2.0%
    Discount factor0.97070.91460.86180.81210.7652-
    Present valueAUD 607.9mAUD 584.3mAUD 561.6mAUD 539.9mAUD 518.9m-3.9%
    Present Value Of The ForecastAUD 2.8bn

    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
    Beta0.516Reported 0.278, pulled toward 1.0 (Blume)
    Cost of equity8.45%Risk-free + beta x equity risk premium
    Cost of debt5.35%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationAUD 14.6bn50.7% of capital
    Total debtAUD 14.2bn49.3% of capital, book value as a proxy
    Tax rate30.0%Effective, capped at statutory
    WACC6.13%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 0.11

    78% of EV

    Forecast FCFF, final year
    AUD 678.2m
    Capex at depreciation, working capital in reinvestment
    AUD 769.1m
    Less reinvestment at g/ROIC (40.8% of NOPAT)
    AUD -313.8m
    Capitalised
    AUD 455.4m
    ROIC (WACC floor)
    6.1%
    Terminal value, undiscounted
    AUD 12.9bn
    Terminal value, discounted
    AUD 9.8bn
    Enterprise value
    AUD 12.7bn
    Less net debt
    AUD 12.5bn
    Equity value
    AUD 138.7m

    Exit at 12.3x EBITDA

    Value per shareAUD 7.79

    88% of EV

    Terminal value, undiscounted
    AUD 26.1bn
    Terminal value, discounted
    AUD 20.0bn
    Enterprise value
    AUD 22.8bn
    Less net debt
    AUD 12.5bn
    Equity value
    AUD 10.3bn

    Spread between methods: 195%.

    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%
    4.13%5.486.056.938.5512.67
    5.13%1.911.962.002.052.09
    6.13%0.030.070.110.140.18
    7.13%-1.32-1.29-1.26-1.23-1.20
    8.13%-2.33-2.31-2.28-2.26-2.23

    Outlined: this model. Green text: above today's price of 10.93. 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 year2.0%19.0%+17.0pp
    EBIT margin33.0%69.0%+36.0pp
    Discount rate6.1%3.8%-2.3pp
    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.