DCF Studio

    EVN.AX · ASX · Basic Materials

    Evolution Mining Limited

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    AUD 3.94

    Market price

    AUD 13.70

    Implied upside

    -71.3%

    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.
    AdjustedOnly 3 year(s) of history available to anchor assumptions on.
    AdjustedCapital expenditure runs at 32.3% of revenue against depreciation of 21.9%. 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 3.94-71.3%
    Exit multiple
    AUD 26.24+91.6%
    Market price
    AUD 13.70

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (AUD). Outflows negative.

    0m427m854mFY25FY26FY27FY28FY29
    Nominal FCFFDiscounted to todayAUD
    LineFY25FY26FY27FY28FY29CAGR
    RevenueAUD 4.2bnAUD 5.3bnAUD 6.7bnAUD 8.5bnAUD 10.7bn+26.5%
    EBITAUD 912.4mAUD 1.2bnAUD 1.5bnAUD 1.8bnAUD 2.3bn+26.5%
    NOPATAUD 638.7mAUD 807.9mAUD 1.0bnAUD 1.3bnAUD 1.6bn+26.5%
    Add depreciation & amortisationAUD 914.7mAUD 1.2bnAUD 1.5bnAUD 1.9bnAUD 2.3bn+26.5%
    Less capital expenditureAUD -1.3bnAUD -1.7bnAUD -2.2bnAUD -2.7bnAUD -3.5bn+26.5%
    Less increase in working capitalAUD 130.0mAUD 164.4mAUD 207.9mAUD 263.0mAUD 332.7m-26.5%
    Free cashflow to firmAUD 333.6mAUD 422.0mAUD 533.8mAUD 675.2mAUD 854.0m+26.5%
    Discount factor0.93960.82950.73240.64660.5708-
    Present valueAUD 313.4mAUD 350.0mAUD 390.9mAUD 436.5mAUD 487.5m+11.7%
    Present Value Of The ForecastAUD 2.0bn

    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
    Beta1.417Reported 1.623, pulled toward 1.0 (Blume)
    Cost of equity13.85%Risk-free + beta x equity risk premium
    Cost of debt7.40%Interest expense / average total debt
    Market capitalisationAUD 28.0bn93.3% of capital
    Total debtAUD 2.0bn6.7% of capital, book value as a proxy
    Tax rate30.0%Effective, capped at statutory
    WACC13.27%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 3.94

    78% of EV

    Forecast FCFF, final year
    AUD 854.0m
    Capex at depreciation, working capital in reinvestment
    AUD 1.6bn
    Less reinvestment at g/ROIC (18.8% of NOPAT)
    AUD -308.1m
    Capitalised
    AUD 1.3bn
    ROIC (WACC floor)
    13.3%
    Terminal value, undiscounted
    AUD 12.6bn
    Terminal value, discounted
    AUD 7.2bn
    Enterprise value
    AUD 9.2bn
    Less net debt
    AUD 1.6bn
    Equity value
    AUD 7.6bn

    Exit at 18.8x EBITDA

    Value per shareAUD 26.24

    96% of EV

    Terminal value, undiscounted
    AUD 87.8bn
    Terminal value, discounted
    AUD 50.1bn
    Enterprise value
    AUD 52.1bn
    Less net debt
    AUD 1.6bn
    Equity value
    AUD 50.5bn

    Spread between methods: 148%.

    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%
    11.27%4.975.005.025.045.07
    12.27%4.394.414.434.454.47
    13.27%3.903.923.943.953.97
    14.27%3.483.503.513.533.55
    15.27%3.123.143.153.173.18

    Outlined: this model. Green text: above today's price of 13.70. 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 year26.5%58.7%+32.2pp
    EBIT margin21.8%59.1%+37.3pp
    Discount rate13.3%5.4%-7.8pp
    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.