DCF Studio

    CSL.AX · ASX · Healthcare

    CSL Limited

    Also onConsensus Drift

    Implied value per share

    AUD 89.52

    Market price

    AUD 175.59

    Implied upside

    -49.0%

    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.
    AdjustedCapital expenditure runs at 9.0% of revenue against depreciation of 6.5%. 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.

    Current EV/EBITDA of 22.6x 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 89.52-49.0%
    Exit multiple
    AUD 210.05+19.6%
    Market price
    AUD 175.59

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn1bn2bnFY27FY28FY29FY30FY31
    Nominal FCFFDiscounted to todayUSD
    LineFY27FY28FY29FY30FY31CAGR
    RevenueUSD 16.6bnUSD 17.6bnUSD 18.7bnUSD 19.8bnUSD 21.0bn+6.0%
    EBITUSD 3.1bnUSD 3.3bnUSD 3.4bnUSD 3.7bnUSD 3.9bn+6.0%
    NOPATUSD 2.6bnUSD 2.7bnUSD 2.9bnUSD 3.1bnUSD 3.3bn+6.0%
    Add depreciation & amortisationUSD 1.1bnUSD 1.1bnUSD 1.2bnUSD 1.3bnUSD 1.4bn+6.0%
    Less capital expenditureUSD -1.5bnUSD -1.6bnUSD -1.7bnUSD -1.8bnUSD -1.9bn+6.0%
    Less increase in working capitalUSD -944.6mUSD -1.0bnUSD -1.1bnUSD -1.1bnUSD -1.2bn+6.0%
    Free cashflow to firmUSD 1.2bnUSD 1.3bnUSD 1.4bnUSD 1.4bnUSD 1.5bn+6.0%
    Discount factor0.96470.89780.83560.77760.7237-
    Present valueUSD 1.2bnUSD 1.2bnUSD 1.1bnUSD 1.1bnUSD 1.1bn-1.3%
    Present Value Of The ForecastUSD 5.7bn

    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
    Beta0.414Reported 0.125, pulled toward 1.0 (Blume)
    Cost of equity7.83%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 84.3bn88.5% of capital
    Total debtUSD 10.9bn11.5% of capital, book value as a proxy
    Tax rate15.8%Effective, capped at statutory
    WACC7.45%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 63.75

    86% of EV

    Forecast FCFF, final year
    USD 1.5bn
    Capex at depreciation, working capital in reinvestment
    USD 3.3bn
    Less reinvestment at g/ROIC (29.6% of NOPAT)
    USD -965.7m
    Capitalised
    USD 2.3bn
    ROIC (reported)
    8.4%
    Terminal value, undiscounted
    USD 47.6bn
    Terminal value, discounted
    USD 34.4bn
    Enterprise value
    USD 40.1bn
    Less net debt
    USD 9.4bn
    Equity value
    USD 30.7bn

    Exit at 20.0x EBITDA

    Value per shareUSD 149.59

    93% of EV

    Terminal value, undiscounted
    USD 104.7bn
    Terminal value, discounted
    USD 75.8bn
    Enterprise value
    USD 81.5bn
    Less net debt
    USD 9.4bn
    Equity value
    USD 72.1bn

    Spread between methods: 80%.

    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%
    5.45%105.57113.20123.31137.42158.61
    6.45%78.7882.0085.9690.9797.59
    7.45%61.0762.3163.7565.4567.51
    8.45%48.5148.7949.0749.3549.63
    9.45%40.2440.4840.7240.9641.20

    Outlined: this model. Green text: above today's price of 125.05. 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 year6.0%25.2%+19.2pp
    EBIT margin18.4%30.1%+11.7pp
    Discount rate7.4%5.4%-2.0pp
    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.