DCF Studio

    CHC.AX · ASX · Real Estate

    Charter Hall Group

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    AUD 0.37

    Market price

    AUD 18.32

    Implied upside

    -98.0%

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

    Wrong toolThis model values the shares at 2.0% of 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.
    AdjustedReported capital expenditure averages just 0.42% 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 1.84% 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.

    Current EV/EBITDA of 52.1x 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 0.37-98.0%
    Exit multiple
    AUD 1.73-90.5%
    Market price
    AUD 18.32

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (AUD). Outflows negative.

    0m68m137mFY27FY28FY29FY30FY31
    Nominal FCFFDiscounted to todayAUD
    LineFY27FY28FY29FY30FY31CAGR
    RevenueAUD 372.6mAUD 309.3mAUD 256.7mAUD 213.0mAUD 176.8m-17.0%
    EBITAUD 162.9mAUD 135.2mAUD 112.2mAUD 93.1mAUD 77.3m-17.0%
    NOPATAUD 127.1mAUD 105.5mAUD 87.6mAUD 72.7mAUD 60.3m-17.0%
    Add depreciation & amortisationAUD 6.9mAUD 5.7mAUD 4.7mAUD 3.9mAUD 3.3m-17.0%
    Less capital expenditureAUD -6.9mAUD -5.7mAUD -4.7mAUD -3.9mAUD -3.3m-17.0%
    Less increase in working capitalAUD 9.5mAUD 7.9mAUD 6.5mAUD 5.4mAUD 4.5m+17.0%
    Free cashflow to firmAUD 136.6mAUD 113.4mAUD 94.1mAUD 78.1mAUD 64.8m-17.0%
    Discount factor0.94420.84170.75040.66890.5963-
    Present valueAUD 129.0mAUD 95.4mAUD 70.6mAUD 52.2mAUD 38.7m-26.0%
    Present Value Of The ForecastAUD 385.9m

    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
    Beta1.247Reported 1.368, pulled toward 1.0 (Blume)
    Cost of equity12.83%Risk-free + beta x equity risk premium
    Cost of debt5.49%Interest expense / average total debt
    Market capitalisationAUD 8.7bn92.3% of capital
    Total debtAUD 717.9m7.7% of capital, book value as a proxy
    Tax rate22.0%Effective, capped at statutory
    WACC12.17%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 0.37

    44% of EV

    Forecast FCFF, final year
    AUD 64.8m
    Capex at depreciation, working capital in reinvestment
    AUD 60.3m
    Less reinvestment at g/ROIC (20.5% of NOPAT)
    AUD -12.4m
    Capitalised
    AUD 47.9m
    ROIC (WACC floor)
    12.2%
    Terminal value, undiscounted
    AUD 507.9m
    Terminal value, discounted
    AUD 302.9m
    Enterprise value
    AUD 688.8m
    Less net debt
    AUD 511.6m
    Equity value
    AUD 177.2m

    Exit at 20.0x EBITDA

    Value per shareAUD 1.73

    71% of EV

    Terminal value, undiscounted
    AUD 1.6bn
    Terminal value, discounted
    AUD 960.7m
    Enterprise value
    AUD 1.3bn
    Less net debt
    AUD 511.6m
    Equity value
    AUD 835.0m

    Spread between methods: 130%.

    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%
    10.17%0.580.580.580.590.59
    11.17%0.460.460.470.470.47
    12.17%0.360.360.370.370.37
    13.17%0.280.280.280.290.29
    14.17%0.210.210.210.210.22

    Outlined: this model. Green text: above today's price of 18.32. 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-17.0%56.5%+73.5pp
    Discount rate12.2%2.8%-9.4pp
    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.