DCF Studio

    BGEO.L · LSE · Financial Services

    Lion Finance Group PLC

    Also onConsensus Drift

    Implied value per share

    GBp 364227.80

    Market price

    GBp 13700.00

    Implied upside

    +2558.6%

    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.
    Wrong toolThis model values the shares at 26.6x 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.
    AdjustedReports in GEL, trades in GBp. Modelled in GEL, converted at the end.
    NoteRisk-free rate is an assumption: GBP assumption - no free live source available for this market.

    Current EV/EBITDA of 2.4x 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
    GBp 364227.80+2558.6%
    Exit multiple
    GBp 113653.39+729.6%
    Market price
    GBp 13700.00

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (GEL). Outflows negative.

    0bn5bn9bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayGEL
    LineFY26FY27FY28FY29FY30CAGR
    RevenueGEL 5.6bnGEL 7.2bnGEL 9.3bnGEL 12.0bnGEL 15.5bn+28.9%
    EBITGEL 4.0bnGEL 5.1bnGEL 6.6bnGEL 8.5bnGEL 11.0bn+28.9%
    NOPATGEL 3.4bnGEL 4.4bnGEL 5.7bnGEL 7.3bnGEL 9.4bn+28.9%
    Add depreciation & amortisationGEL 284.0mGEL 366.1mGEL 471.9mGEL 608.3mGEL 784.1m+28.9%
    Less capital expenditureGEL -351.2mGEL -452.7mGEL -583.5mGEL -752.2mGEL -969.5m+28.9%
    Less increase in working capitalGEL 28.1mGEL 36.2mGEL 46.6mGEL 60.1mGEL 77.5m-28.9%
    Free cashflow to firmGEL 3.4bnGEL 4.4bnGEL 5.6bnGEL 7.2bnGEL 9.3bn+28.9%
    Discount factor0.96660.90320.84390.78850.7367-
    Present valueGEL 3.3bnGEL 3.9bnGEL 4.7bnGEL 5.7bnGEL 6.9bn+20.4%
    Present Value Of The ForecastGEL 24.5bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate4.50%GBP assumption - no free live source available for this market (assumption)
    Equity risk premium5.50%Market assumption
    Beta0.844Reported 0.767, pulled toward 1.0 (Blume)
    Cost of equity9.14%Risk-free + beta x equity risk premium
    Cost of debt6.50%Implied cost of debt of 30.4% 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 capitalisationGEL 5.9bn40.7% of capital
    Total debtGEL 8.6bn59.3% of capital, book value as a proxy
    Tax rate14.2%Effective, capped at statutory
    WACC7.03%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 shareGEL 3642.28

    85% of EV

    Forecast FCFF, final year
    GEL 9.3bn
    Capex at depreciation, working capital in reinvestment
    GEL 9.4bn
    Less reinvestment at g/ROIC (13.9% of NOPAT)
    GEL -1.3bn
    Capitalised
    GEL 8.1bn
    ROIC (reported)
    18.0%
    Terminal value, undiscounted
    GEL 183.8bn
    Terminal value, discounted
    GEL 135.4bn
    Enterprise value
    GEL 159.9bn
    Less net debt
    GEL 887.3m
    Equity value
    GEL 159.0bn

    Exit at 3.0x EBITDA

    Value per shareGEL 1136.53

    52% of EV

    Terminal value, undiscounted
    GEL 35.3bn
    Terminal value, discounted
    GEL 26.0bn
    Enterprise value
    GEL 50.5bn
    Less net debt
    GEL 887.3m
    Equity value
    GEL 49.6bn

    Spread between methods: 105%.

    Sensitivity

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

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    5.03%5140.625759.356621.057905.5910028.40
    6.03%3966.744292.294708.865261.546031.13
    7.03%3218.693409.853642.263931.294301.02
    8.03%2700.712820.972962.213130.723335.51
    9.03%2321.072400.292491.032596.162719.57

    Outlined: this model. Green text: above today's price of 137.00. 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 year28.9%-38.0%-66.9pp
    EBIT margin71.0%3.2%-67.9pp
    Discount rate7.0%93.2%+86.2pp
    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.