DCF Studio

    CIP.AX · ASX · Real Estate

    Centuria Industrial REIT

    Also onConsensus Drift

    Implied value per share

    AUD 1.44

    Market price

    AUD 2.82

    Implied upside

    -49.0%

    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.
    AdjustedReported capital expenditure averages just 0.00% 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 1.00% 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.
    AdjustedCapital expenditure runs at 1.0% of revenue against depreciation of 0.0%. 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 1.44-49.0%
    Exit multiple
    AUD 3.10+9.9%
    Market price
    AUD 2.82

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (AUD). Outflows negative.

    0m91m183mFY27FY28FY29FY30FY31
    Nominal FCFFDiscounted to todayAUD
    LineFY27FY28FY29FY30FY31CAGR
    RevenueAUD 257.8mAUD 267.5mAUD 277.7mAUD 288.2mAUD 299.2m+3.8%
    EBITAUD 165.4mAUD 171.7mAUD 178.2mAUD 184.9mAUD 192.0m+3.8%
    NOPATAUD 165.4mAUD 171.7mAUD 178.2mAUD 184.9mAUD 192.0m+3.8%
    Add depreciation & amortisationAUD 0.00AUD 0.00AUD 0.00AUD 0.00AUD 0.00-
    Less capital expenditureAUD -2.6mAUD -2.7mAUD -2.8mAUD -2.9mAUD -3.0m+3.8%
    Less increase in working capitalAUD -5.3mAUD -5.5mAUD -5.7mAUD -5.9mAUD -6.1m+3.8%
    Free cashflow to firmAUD 157.5mAUD 163.5mAUD 169.7mAUD 176.2mAUD 182.9m+3.8%
    Discount factor0.95950.88350.81350.74900.6896-
    Present valueAUD 151.2mAUD 144.5mAUD 138.1mAUD 131.9mAUD 126.1m-4.4%
    Present Value Of The ForecastAUD 691.8m

    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
    Beta0.969Reported 0.954, pulled toward 1.0 (Blume)
    Cost of equity11.16%Risk-free + beta x equity risk premium
    Cost of debt5.35%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationAUD 1.8bn56.1% of capital
    Total debtAUD 1.4bn43.9% of capital, book value as a proxy
    Tax rate0.0%Effective, capped at statutory
    WACC8.61%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 1.44

    69% of EV

    Forecast FCFF, final year
    AUD 182.9m
    Capex at depreciation, working capital in reinvestment
    AUD 192.0m
    Less reinvestment at g/ROIC (29.0% of NOPAT)
    AUD -55.7m
    Capitalised
    AUD 136.2m
    ROIC (WACC floor)
    8.6%
    Terminal value, undiscounted
    AUD 2.3bn
    Terminal value, discounted
    AUD 1.6bn
    Enterprise value
    AUD 2.3bn
    Less net debt
    AUD 1.4bn
    Equity value
    AUD 902.0m

    Exit at 19.8x EBITDA

    Value per shareAUD 3.10

    79% of EV

    Terminal value, undiscounted
    AUD 3.8bn
    Terminal value, discounted
    AUD 2.6bn
    Enterprise value
    AUD 3.3bn
    Less net debt
    AUD 1.4bn
    Equity value
    AUD 1.9bn

    Spread between methods: 73%.

    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%
    6.61%2.502.522.532.552.57
    7.61%1.881.901.911.931.94
    8.61%1.411.431.441.451.46
    9.61%1.041.051.061.071.08
    10.61%0.740.750.760.770.77

    Outlined: this model. Green text: above today's price of 2.82. 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 year3.8%12.1%+8.4pp
    EBIT margin64.2%88.3%+24.2pp
    Discount rate8.6%6.2%-2.4pp
    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.