DCF Studio

    CMM.AX · ASX · Basic Materials

    Capricorn Metals Ltd

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    AUD 17.19

    Market price

    AUD 15.11

    Implied upside

    +13.8%

    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.
    AdjustedCapital expenditure runs at 25.6% of revenue against depreciation of 7.5%. 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 17.19+13.8%
    Exit multiple
    AUD 38.93+157.7%
    Market price
    AUD 15.11

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (AUD). Outflows negative.

    0m324m648mFY27FY28FY29FY30FY31
    Nominal FCFFDiscounted to todayAUD
    LineFY27FY28FY29FY30FY31CAGR
    RevenueAUD 962.8mAUD 1.3bnAUD 1.8bnAUD 2.4bnAUD 3.2bn+35.3%
    EBITAUD 447.8mAUD 606.0mAUD 820.2mAUD 1.1bnAUD 1.5bn+35.3%
    NOPATAUD 313.4mAUD 424.2mAUD 574.1mAUD 777.0mAUD 1.1bn+35.3%
    Add depreciation & amortisationAUD 71.7mAUD 97.1mAUD 131.4mAUD 177.8mAUD 240.7m+35.3%
    Less capital expenditureAUD -246.2mAUD -333.2mAUD -450.9mAUD -610.2mAUD -825.9m+35.3%
    Less increase in working capitalAUD 54.0mAUD 73.1mAUD 99.0mAUD 134.0mAUD 181.3m-35.3%
    Free cashflow to firmAUD 193.1mAUD 261.3mAUD 353.6mAUD 478.6mAUD 647.7m+35.3%
    Discount factor0.94320.83920.74670.66430.5910-
    Present valueAUD 182.1mAUD 219.3mAUD 264.0mAUD 317.9mAUD 382.8m+20.4%
    Present Value Of The ForecastAUD 1.4bn

    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
    Beta1.178Reported 1.266, pulled toward 1.0 (Blume)
    Cost of equity12.42%Risk-free + beta x equity risk premium
    Cost of debt7.61%Interest expense / average total debt
    Market capitalisationAUD 6.9bn99.7% of capital
    Total debtAUD 20.3m0.3% of capital, book value as a proxy
    Tax rate30.0%Effective, capped at statutory
    WACC12.40%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 17.19

    81% of EV

    Forecast FCFF, final year
    AUD 647.7m
    Capex at depreciation, working capital in reinvestment
    AUD 1.1bn
    Less reinvestment at g/ROIC (9.2% of NOPAT)
    AUD -96.7m
    Capitalised
    AUD 954.9m
    ROIC (reported)
    27.2%
    Terminal value, undiscounted
    AUD 9.9bn
    Terminal value, discounted
    AUD 5.8bn
    Enterprise value
    AUD 7.2bn
    Less net debt
    AUD -485.1m
    Equity value
    AUD 7.7bn

    Exit at 15.1x EBITDA

    Value per shareAUD 38.93

    92% of EV

    Terminal value, undiscounted
    AUD 26.4bn
    Terminal value, discounted
    AUD 15.6bn
    Enterprise value
    AUD 16.9bn
    Less net debt
    AUD -485.1m
    Equity value
    AUD 17.4bn

    Spread between methods: 77%.

    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%
    10.40%20.5221.2422.0422.9423.98
    11.40%18.2218.7519.3319.9920.72
    12.40%16.3516.7517.1917.6718.21
    13.40%14.8115.1215.4515.8216.21
    14.40%13.5213.7614.0214.3014.60

    Outlined: this model. Green text: above today's price of 15.11. 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 year35.3%31.5%-3.8pp
    EBIT margin46.5%41.1%-5.4pp
    Discount rate12.4%13.6%+1.2pp
    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.