DCF Studio

    EMR.AX · ASX · Basic Materials

    Emerald Resources NL

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    AUD 9.00

    Market price

    AUD 7.07

    Implied upside

    +27.3%

    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.
    AdjustedConsensus rests on as few as 2 analyst estimate(s).

    Value Per Share

    Perpetuity growth
    AUD 9.00+27.3%
    Exit multiple
    AUD 13.76+94.7%
    Market price
    AUD 7.07

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (AUD). Outflows negative.

    0m298m596mFY27FY28FY29FY30FY31
    Nominal FCFFDiscounted to todayAUD
    LineFY27FY28FY29FY30FY31CAGR
    RevenueAUD 760.9mAUD 962.2mAUD 1.2bnAUD 1.5bnAUD 1.9bn+26.4%
    EBITAUD 332.2mAUD 420.1mAUD 531.2mAUD 671.7mAUD 849.3m+26.4%
    NOPATAUD 232.6mAUD 294.1mAUD 371.8mAUD 470.2mAUD 594.5m+26.4%
    Add depreciation & amortisationAUD 46.8mAUD 59.1mAUD 74.8mAUD 94.5mAUD 119.5m+26.4%
    Less capital expenditureAUD -38.3mAUD -48.4mAUD -61.2mAUD -77.4mAUD -97.8m+26.4%
    Less increase in working capitalAUD -7.8mAUD -9.8mAUD -12.4mAUD -15.7mAUD -19.9m+26.4%
    Free cashflow to firmAUD 233.3mAUD 295.0mAUD 373.0mAUD 471.6mAUD 596.4m+26.4%
    Discount factor0.95000.85730.77370.69820.6301-
    Present valueAUD 221.6mAUD 252.9mAUD 288.6mAUD 329.3mAUD 375.8m+14.1%
    Present Value Of The ForecastAUD 1.5bn

    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
    Beta0.918Reported 0.878, pulled toward 1.0 (Blume)
    Cost of equity10.86%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 4.7bn99.3% of capital
    Total debtAUD 31.9m0.7% of capital, book value as a proxy
    Tax rate30.0%Effective, capped at statutory
    WACC10.81%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 9.00

    73% of EV

    Forecast FCFF, final year
    AUD 596.4m
    Capex at depreciation, working capital in reinvestment
    AUD 594.5m
    Less reinvestment at g/ROIC (11.9% of NOPAT)
    AUD -70.6m
    Capitalised
    AUD 523.9m
    ROIC (reported)
    21.1%
    Terminal value, undiscounted
    AUD 6.5bn
    Terminal value, discounted
    AUD 4.1bn
    Enterprise value
    AUD 5.5bn
    Less net debt
    AUD -401.8m
    Equity value
    AUD 5.9bn

    Exit at 11.8x EBITDA

    Value per shareAUD 13.76

    83% of EV

    Terminal value, undiscounted
    AUD 11.5bn
    Terminal value, discounted
    AUD 7.2bn
    Enterprise value
    AUD 8.7bn
    Less net debt
    AUD -401.8m
    Equity value
    AUD 9.1bn

    Spread between methods: 42%.

    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%
    8.81%10.8911.3011.7612.3112.96
    9.81%9.599.8710.1910.5510.97
    10.81%8.588.789.009.259.53
    11.81%7.767.918.068.248.44
    12.81%7.097.207.317.447.58

    Outlined: this model. Green text: above today's price of 7.07. 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 year26.4%19.3%-7.2pp
    EBIT margin43.7%33.6%-10.0pp
    Discount rate10.8%13.2%+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.