DCF Studio

    AZJ.AX · ASX · Industrials

    Aurizon Holdings Limited

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    AUD 3.76

    Market price

    AUD 3.70

    Implied upside

    +1.6%

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

    AdjustedSome line items were not reported and have been derived. Each one is labelled in the workings below.

    Value Per Share

    Perpetuity growth
    AUD 3.76+1.6%
    Exit multiple
    AUD 5.17+39.6%
    Market price
    AUD 3.70

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (AUD). Outflows negative.

    0m337m674mFY27FY28FY29FY30FY31
    Nominal FCFFDiscounted to todayAUD
    LineFY27FY28FY29FY30FY31CAGR
    RevenueAUD 4.4bnAUD 4.7bnAUD 5.0bnAUD 5.4bnAUD 5.7bn+6.6%
    EBITAUD 926.1mAUD 987.3mAUD 1.1bnAUD 1.1bnAUD 1.2bn+6.6%
    NOPATAUD 648.3mAUD 691.1mAUD 736.8mAUD 785.5mAUD 837.5m+6.6%
    Add depreciation & amortisationAUD 831.1mAUD 886.1mAUD 944.7mAUD 1.0bnAUD 1.1bn+6.6%
    Less capital expenditureAUD -888.0mAUD -946.7mAUD -1.0bnAUD -1.1bnAUD -1.1bn+6.6%
    Less increase in working capitalAUD -69.6mAUD -74.2mAUD -79.1mAUD -84.3mAUD -89.9m+6.6%
    Free cashflow to firmAUD 521.8mAUD 556.3mAUD 593.1mAUD 632.3mAUD 674.1m+6.6%
    Discount factor0.96780.90640.84890.79510.7447-
    Present valueAUD 505.0mAUD 504.3mAUD 503.5mAUD 502.7mAUD 502.0m-0.1%
    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
    Beta0.605Reported 0.411, pulled toward 1.0 (Blume)
    Cost of equity8.98%Risk-free + beta x equity risk premium
    Cost of debt6.18%Interest expense / average total debt
    Market capitalisationAUD 6.2bn52.5% of capital
    Total debtAUD 5.6bn47.5% of capital, book value as a proxy
    Tax rate30.0%Effective, capped at statutory
    WACC6.77%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 3.76

    79% of EV

    Forecast FCFF, final year
    AUD 674.1m
    Capex at depreciation, working capital in reinvestment
    AUD 837.5m
    Less reinvestment at g/ROIC (36.9% of NOPAT)
    AUD -309.2m
    Capitalised
    AUD 528.3m
    ROIC (WACC floor)
    6.8%
    Terminal value, undiscounted
    AUD 12.7bn
    Terminal value, discounted
    AUD 9.4bn
    Enterprise value
    AUD 12.0bn
    Less net debt
    AUD 5.5bn
    Equity value
    AUD 6.5bn

    Exit at 7.0x EBITDA

    Value per shareAUD 5.17

    82% of EV

    Terminal value, undiscounted
    AUD 15.9bn
    Terminal value, discounted
    AUD 11.9bn
    Enterprise value
    AUD 14.4bn
    Less net debt
    AUD 5.5bn
    Equity value
    AUD 8.9bn

    Spread between methods: 31%.

    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%
    4.77%7.528.018.709.7611.63
    5.77%5.045.115.195.295.43
    6.77%3.713.733.763.793.81
    7.77%2.782.802.822.852.87
    8.77%2.062.082.102.122.14

    Outlined: this model. Green text: above today's price of 3.70. 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 year6.6%6.4%-0.2pp
    EBIT margin20.9%20.7%-0.2pp
    Discount rate6.8%6.8%+0.1pp
    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.