DCF Studio

    CSC.AX · ASX · Basic Materials

    Capstone Copper Corp.

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    AUD -2.95

    Market price

    AUD 14.37

    Implied upside

    -120.5%

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

    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 34.8% of revenue against depreciation of 17.9%. 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 -2.95-120.5%
    Exit multiple
    AUD 15.90+10.7%
    Market price
    AUD 14.37

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    -951074813-4755374060FY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 2.9bnUSD 3.5bnUSD 4.3bnUSD 5.2bnUSD 6.4bn+22.1%
    EBITUSD 298.0mUSD 363.9mUSD 444.4mUSD 542.6mUSD 662.6m+22.1%
    NOPATUSD 209.4mUSD 255.7mUSD 312.3mUSD 381.3mUSD 465.7m+22.1%
    Add depreciation & amortisationUSD 514.9mUSD 628.7mUSD 767.8mUSD 937.6mUSD 1.1bn+22.1%
    Less capital expenditureUSD -1.0bnUSD -1.2bnUSD -1.5bnUSD -1.8bnUSD -2.2bn+22.1%
    Less increase in working capitalUSD -150.4mUSD -183.6mUSD -224.3mUSD -273.8mUSD -334.4m+22.1%
    Free cashflow to firmUSD -427.7mUSD -522.3mUSD -637.8mUSD -778.9mUSD -951.1m-22.1%
    Discount factor0.93190.80930.70280.61030.5300-
    Present valueUSD -398.6mUSD -422.7mUSD -448.2mUSD -475.3mUSD -504.1m-6.0%
    Present Value Of The ForecastUSD -2.2bn

    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
    Beta1.812Reported 2.212, pulled toward 1.0 (Blume)
    Cost of equity16.22%Risk-free + beta x equity risk premium
    Cost of debt9.04%Interest expense / average total debt
    Market capitalisationUSD 11.0bn89.2% of capital
    Total debtUSD 1.3bn10.8% of capital, book value as a proxy
    Tax rate29.7%Effective, capped at statutory
    WACC15.15%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 -2.10

    -288% of EV

    Forecast FCFF, final year
    USD -951.1m
    Capex at depreciation, working capital in reinvestment
    USD 465.7m
    Less reinvestment at g/ROIC (16.5% of NOPAT)
    USD -76.8m
    Capitalised
    USD 388.8m
    ROIC (WACC floor)
    15.2%
    Terminal value, undiscounted
    USD 3.2bn
    Terminal value, discounted
    USD 1.7bn
    Enterprise value
    USD -579.4m
    Less net debt
    USD 1.0bn
    Equity value
    USD -1.6bn

    Exit at 12.5x EBITDA

    Value per shareUSD 11.33

    123% of EV

    Terminal value, undiscounted
    USD 22.5bn
    Terminal value, discounted
    USD 11.9bn
    Enterprise value
    USD 9.7bn
    Less net debt
    USD 1.0bn
    Equity value
    USD 8.7bn

    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%
    13.15%-1.73-1.72-1.70-1.69-1.68
    14.15%-1.95-1.94-1.92-1.91-1.90
    15.15%-2.12-2.11-2.10-2.09-2.08
    16.15%-2.27-2.26-2.25-2.24-2.23
    17.15%-2.39-2.38-2.37-2.36-2.36

    Outlined: this model. Green text: above today's price of 10.23. 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
    EBIT margin10.3%45.5%+35.2pp
    Discount rate15.2%3.5%-11.7pp
    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.