DCF Studio

    ASX.AX · ASX · Financial Services

    ASX Limited

    Also onConsensus Drift

    Implied value per share

    AUD 100.80

    Market price

    AUD 55.73

    Implied upside

    +80.9%

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

    Wrong toolThis is a financial. Banks and insurers report no meaningful operating income, and capex and working capital do not mean what a free-cashflow model assumes, so a DCF will misprice it. The model below runs on best-effort numbers - treat it as an illustration, not a valuation.
    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 4.35% 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.

    Current EV/EBITDA of 0.9x sits outside a defensible 3-20x band, so the exit multiple is capped at 3.0x. A multiple that far out usually means EBITDA is the wrong denominator for this business.

    Value Per Share

    Perpetuity growth
    AUD 100.80+80.9%
    Exit multiple
    AUD 77.54+39.1%
    Market price
    AUD 55.73

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (AUD). Outflows negative.

    0m362m724mFY27FY28FY29FY30FY31
    Nominal FCFFDiscounted to todayAUD
    LineFY27FY28FY29FY30FY31CAGR
    RevenueAUD 1.4bnAUD 1.5bnAUD 1.6bnAUD 1.7bnAUD 1.8bn+7.7%
    EBITAUD 792.4mAUD 853.7mAUD 919.7mAUD 990.9mAUD 1.1bn+7.7%
    NOPATAUD 554.7mAUD 597.6mAUD 643.8mAUD 693.6mAUD 747.3m+7.7%
    Add depreciation & amortisationAUD 59.5mAUD 64.1mAUD 69.1mAUD 74.4mAUD 80.2m+7.7%
    Less capital expenditureAUD -59.5mAUD -64.1mAUD -69.1mAUD -74.4mAUD -80.2m+7.7%
    Less increase in working capitalAUD -17.5mAUD -18.8mAUD -20.3mAUD -21.9mAUD -23.6m+7.7%
    Free cashflow to firmAUD 537.2mAUD 578.7mAUD 623.5mAUD 671.8mAUD 723.7m+7.7%
    Discount factor0.96020.88520.81600.75230.6935-
    Present valueAUD 515.8mAUD 512.3mAUD 508.8mAUD 505.4mAUD 501.9m-0.7%
    Present Value Of The ForecastAUD 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
    Beta0.546Reported 0.322, pulled toward 1.0 (Blume)
    Cost of equity8.62%Risk-free + beta x equity risk premium
    Cost of debt7.35%Implied cost of debt of 101.3% is not a credible funding cost, so risk-free + 2bp is assumed instead. Interest expense and reported debt are measuring different things - common for banks, whose interest expense includes deposits that total debt excludes.
    Market capitalisationAUD 10.9bn95.7% of capital
    Total debtAUD 490.2m4.3% of capital, book value as a proxy
    Tax rate30.0%Effective, capped at statutory
    WACC8.47%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 100.80

    73% of EV

    Forecast FCFF, final year
    AUD 723.7m
    Capex at depreciation, working capital in reinvestment
    AUD 747.3m
    Less reinvestment at g/ROIC (22.3% of NOPAT)
    AUD -166.5m
    Capitalised
    AUD 580.8m
    ROIC (reported)
    11.2%
    Terminal value, undiscounted
    AUD 10.0bn
    Terminal value, discounted
    AUD 6.9bn
    Enterprise value
    AUD 9.5bn
    Less net debt
    AUD -10.2bn
    Equity value
    AUD 19.6bn

    Exit at 3.0x EBITDA

    Value per shareAUD 77.54

    48% of EV

    Terminal value, undiscounted
    AUD 3.4bn
    Terminal value, discounted
    AUD 2.4bn
    Enterprise value
    AUD 4.9bn
    Less net debt
    AUD -10.2bn
    Equity value
    AUD 15.1bn

    Spread between methods: 26%.

    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%
    6.47%117.11120.17123.98128.84135.29
    7.47%106.46108.11110.07112.43115.36
    8.47%98.8699.76100.80102.00103.42
    9.47%93.1793.6594.1894.7895.45
    10.47%88.7488.9789.2189.4789.75

    Outlined: this model. Green text: above today's price of 55.73. 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
    EBIT margin57.9%4.7%-53.2pp
    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.