DCF Studio

    BOQ.AX · ASX · Financial Services

    Bank of Queensland Limited

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    AUD -12.16

    Market price

    AUD 6.65

    Implied upside

    -282.8%

    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.
    AdjustedOnly 3 year(s) of history available to anchor assumptions on.
    AdjustedCapital expenditure runs at 10.8% of revenue against depreciation of 7.6%. A perpetuity has to be a steady state, so the terminal year uses maintenance capex at depreciation and then charges the reinvestment terminal growth requires (g/ROIC of NOPAT). The bridge is shown under Terminal Value.

    Current EV/EBITDA of 35.1x sits outside a defensible 3-20x band, so the exit multiple is capped at 20.0x. A multiple that far out usually means EBITDA is the wrong denominator for this business.

    Value Per Share

    Perpetuity growth
    AUD -12.16-282.8%
    Exit multiple
    AUD -7.88-218.5%
    Market price
    AUD 6.65

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (AUD). Outflows negative.

    0m110m219mFY25FY26FY27FY28FY29
    Nominal FCFFDiscounted to todayAUD
    LineFY25FY26FY27FY28FY29CAGR
    RevenueAUD 1.6bnAUD 1.5bnAUD 1.5bnAUD 1.5bnAUD 1.5bn-1.6%
    EBITAUD 419.1mAUD 412.6mAUD 406.1mAUD 399.8mAUD 393.6m-1.6%
    NOPATAUD 293.4mAUD 288.8mAUD 284.3mAUD 279.9mAUD 275.5m-1.6%
    Add depreciation & amortisationAUD 120.1mAUD 118.2mAUD 116.4mAUD 114.6mAUD 112.8m-1.6%
    Less capital expenditureAUD -169.5mAUD -166.8mAUD -164.2mAUD -161.7mAUD -159.1m-1.6%
    Less increase in working capitalAUD -24.9mAUD -24.5mAUD -24.1mAUD -23.8mAUD -23.4m-1.6%
    Free cashflow to firmAUD 219.1mAUD 215.7mAUD 212.3mAUD 209.0mAUD 205.7m-1.6%
    Discount factor0.97090.91520.86260.81310.7665-
    Present valueAUD 212.7mAUD 197.4mAUD 183.2mAUD 169.9mAUD 157.7m-7.2%
    Present Value Of The ForecastAUD 920.9m

    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
    Beta0.786Reported 0.681, pulled toward 1.0 (Blume)
    Cost of equity10.07%Risk-free + beta x equity risk premium
    Cost of debt7.35%Implied cost of debt of 18.5% 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 4.4bn19.2% of capital
    Total debtAUD 18.4bn80.8% of capital, book value as a proxy
    Tax rate30.0%Effective, capped at statutory
    WACC6.09%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 -12.16

    82% of EV

    Forecast FCFF, final year
    AUD 205.7m
    Capex at depreciation, working capital in reinvestment
    AUD 327.1m
    Less reinvestment at g/ROIC (41.1% of NOPAT)
    AUD -134.3m
    Capitalised
    AUD 192.8m
    ROIC (WACC floor)
    6.1%
    Terminal value, undiscounted
    AUD 5.5bn
    Terminal value, discounted
    AUD 4.2bn
    Enterprise value
    AUD 5.1bn
    Less net debt
    AUD 15.2bn
    Equity value
    AUD -10.1bn

    Exit at 20.0x EBITDA

    Value per shareAUD -7.88

    89% of EV

    Terminal value, undiscounted
    AUD 10.1bn
    Terminal value, discounted
    AUD 7.8bn
    Enterprise value
    AUD 8.7bn
    Less net debt
    AUD 15.2bn
    Equity value
    AUD -6.5bn

    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%
    4.09%-9.02-8.98-8.93-8.89-8.85
    5.09%-10.93-10.90-10.87-10.83-10.80
    6.09%-12.21-12.18-12.16-12.13-12.11
    7.09%-13.12-13.10-13.08-13.06-13.04
    8.09%-13.81-13.79-13.77-13.76-13.74

    Outlined: this model. Green text: above today's price of 6.65. 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 year-1.6%27.3%+28.9pp
    Discount rate6.1%2.7%-3.4pp
    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.