DCF Studio

    BXB.AX · ASX · Industrials

    Brambles Limited

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    AUD 6.74

    Market price

    AUD 18.53

    Implied upside

    -63.6%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case · USD model at 1.4042

    AdjustedSome line items were not reported and have been derived. Each one is labelled in the workings below.
    AdjustedReports in USD, trades in AUD. Modelled in USD, converted at the end.
    AdjustedFree cashflow is negative in at least one forecast year, so terminal value carries most of the valuation.
    AdjustedCapital expenditure runs at 22.9% of revenue against depreciation of 12.4%. 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.

    Value Per Share

    Perpetuity growth
    AUD 6.74-63.6%
    Exit multiple
    AUD 23.16+25.0%
    Market price
    AUD 18.53

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    -81228338-406141690FY27FY28FY29FY30FY31
    Nominal FCFFDiscounted to todayUSD
    LineFY27FY28FY29FY30FY31CAGR
    RevenueUSD 7.6bnUSD 8.2bnUSD 8.9bnUSD 9.7bnUSD 10.4bn+8.2%
    EBITUSD 1.1bnUSD 1.2bnUSD 1.3bnUSD 1.4bnUSD 1.5bn+8.2%
    NOPATUSD 754.3mUSD 816.2mUSD 883.2mUSD 955.7mUSD 1.0bn+8.2%
    Add depreciation & amortisationUSD 941.2mUSD 1.0bnUSD 1.1bnUSD 1.2bnUSD 1.3bn+8.2%
    Less capital expenditureUSD -1.7bnUSD -1.9bnUSD -2.0bnUSD -2.2bnUSD -2.4bn+8.2%
    Less increase in working capitalUSD -11.3mUSD -12.2mUSD -13.2mUSD -14.3mUSD -15.5m+8.2%
    Free cashflow to firmUSD -59.3mUSD -64.1mUSD -69.4mUSD -75.1mUSD -81.2m-8.2%
    Discount factor0.95980.88410.81440.75010.6910-
    Present valueUSD -56.9mUSD -56.7mUSD -56.5mUSD -56.3mUSD -56.1m+0.3%
    Present Value Of The ForecastUSD -282.5m

    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
    Beta0.634Reported 0.454, pulled toward 1.0 (Blume)
    Cost of equity9.15%Risk-free + beta x equity risk premium
    Cost of debt5.35%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationUSD 24.7bn89.1% of capital
    Total debtUSD 3.0bn10.9% of capital, book value as a proxy
    Tax rate30.0%Effective, capped at statutory
    WACC8.56%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 shareUSD 4.80

    103% of EV

    Forecast FCFF, final year
    USD -81.2m
    Capex at depreciation, working capital in reinvestment
    USD 1.0bn
    Less reinvestment at g/ROIC (20.2% of NOPAT)
    USD -208.7m
    Capitalised
    USD 825.5m
    ROIC (reported)
    12.4%
    Terminal value, undiscounted
    USD 14.0bn
    Terminal value, discounted
    USD 9.6bn
    Enterprise value
    USD 9.4bn
    Less net debt
    USD 3.0bn
    Equity value
    USD 6.4bn

    Exit at 13.2x EBITDA

    Value per shareUSD 16.49

    101% of EV

    Terminal value, undiscounted
    USD 36.6bn
    Terminal value, discounted
    USD 25.3bn
    Enterprise value
    USD 25.0bn
    Less net debt
    USD 3.0bn
    Equity value
    USD 22.0bn

    Spread between methods: 110%.

    Sensitivity

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

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    6.56%7.828.489.2910.3211.68
    7.56%5.786.156.597.127.77
    8.56%4.344.554.805.095.43
    9.56%3.263.393.533.693.87
    10.56%2.442.512.592.672.77

    Outlined: this model. Green text: above today's price of 13.20. 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 year8.2%26.7%+18.5pp
    EBIT margin14.1%26.1%+12.0pp
    Discount rate8.6%5.7%-2.9pp
    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.