DCF Studio

    AUB.AX · ASX · Financial Services

    AUB Group Limited

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    AUD 25.20

    Market price

    AUD 28.89

    Implied upside

    -12.8%

    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 0.27% 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 9.11% 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.

    Value Per Share

    Perpetuity growth
    AUD 25.20-12.8%
    Exit multiple
    AUD 44.49+54.0%
    Market price
    AUD 28.89

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (AUD). Outflows negative.

    0m140m280mFY27FY28FY29FY30FY31
    Nominal FCFFDiscounted to todayAUD
    LineFY27FY28FY29FY30FY31CAGR
    RevenueAUD 1.2bnAUD 1.4bnAUD 1.6bnAUD 1.8bnAUD 2.1bn+13.8%
    EBITAUD 198.8mAUD 226.2mAUD 257.3mAUD 292.8mAUD 333.1m+13.8%
    NOPATAUD 148.8mAUD 169.3mAUD 192.6mAUD 219.1mAUD 249.3m+13.8%
    Add depreciation & amortisationAUD 113.0mAUD 128.6mAUD 146.3mAUD 166.5mAUD 189.4m+13.8%
    Less capital expenditureAUD -113.0mAUD -128.6mAUD -146.3mAUD -166.5mAUD -189.4m+13.8%
    Less increase in working capitalAUD 18.2mAUD 20.7mAUD 23.6mAUD 26.8mAUD 30.5m-13.8%
    Free cashflow to firmAUD 167.0mAUD 190.0mAUD 216.2mAUD 246.0mAUD 279.9m+13.8%
    Discount factor0.96020.88540.81630.75270.6940-
    Present valueAUD 160.3mAUD 168.2mAUD 176.5mAUD 185.1mAUD 194.2m+4.9%
    Present Value Of The ForecastAUD 884.4m

    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
    Beta0.646Reported 0.471, pulled toward 1.0 (Blume)
    Cost of equity9.22%Risk-free + beta x equity risk premium
    Cost of debt8.09%Interest expense / average total debt
    Market capitalisationAUD 3.8bn75.8% of capital
    Total debtAUD 1.2bn24.2% of capital, book value as a proxy
    Tax rate25.2%Effective, capped at statutory
    WACC8.46%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 25.20

    70% of EV

    Forecast FCFF, final year
    AUD 279.9m
    Capex at depreciation, working capital in reinvestment
    AUD 249.3m
    Less reinvestment at g/ROIC (29.6% of NOPAT)
    AUD -73.7m
    Capitalised
    AUD 175.6m
    ROIC (WACC floor)
    8.5%
    Terminal value, undiscounted
    AUD 3.0bn
    Terminal value, discounted
    AUD 2.1bn
    Enterprise value
    AUD 3.0bn
    Less net debt
    AUD -112.2m
    Equity value
    AUD 3.1bn

    Exit at 12.3x EBITDA

    Value per shareAUD 44.49

    83% of EV

    Terminal value, undiscounted
    AUD 6.4bn
    Terminal value, discounted
    AUD 4.5bn
    Enterprise value
    AUD 5.4bn
    Less net debt
    AUD -112.2m
    Equity value
    AUD 5.5bn

    Spread between methods: 55%.

    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%
    6.46%32.5732.6832.8032.9233.04
    7.46%28.2928.3928.4928.5928.69
    8.46%25.0325.1125.2025.2825.36
    9.46%22.4622.5322.6022.6822.75
    10.46%20.3820.4520.5120.5720.63

    Outlined: this model. Green text: above today's price of 28.89. 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 year13.8%17.3%+3.5pp
    EBIT margin16.0%18.5%+2.5pp
    Discount rate8.5%7.4%-1.1pp
    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.