DCF Studio

    FBU.AX · ASX · Basic Materials

    Fletcher Building Limited

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    AUD -0.68

    Market price

    AUD 2.93

    Implied upside

    -123.1%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case · NZD model at 0.8033

    AdjustedSome line items were not reported and have been derived. Each one is labelled in the workings below.
    AdjustedReports in NZD, trades in AUD. Modelled in NZD, converted at the end.

    Value Per Share

    Perpetuity growth
    AUD -0.68-123.1%
    Exit multiple
    AUD 0.51-82.6%
    Market price
    AUD 2.93

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (NZD). Outflows negative.

    0m103m206mFY27FY28FY29FY30FY31
    Nominal FCFFDiscounted to todayNZD
    LineFY27FY28FY29FY30FY31CAGR
    RevenueNZD 5.3bnNZD 4.8bnNZD 4.2bnNZD 3.8bnNZD 3.4bn-10.9%
    EBITNZD 57.7mNZD 51.4mNZD 45.8mNZD 40.8mNZD 36.4m-10.9%
    NOPATNZD 45.4mNZD 40.5mNZD 36.1mNZD 32.1mNZD 28.6m-10.9%
    Add depreciation & amortisationNZD 254.2mNZD 226.5mNZD 201.9mNZD 179.9mNZD 160.3m-10.9%
    Less capital expenditureNZD -257.7mNZD -229.6mNZD -204.6mNZD -182.4mNZD -162.5m-10.9%
    Less increase in working capitalNZD 163.8mNZD 146.0mNZD 130.1mNZD 115.9mNZD 103.3m+10.9%
    Free cashflow to firmNZD 205.7mNZD 183.3mNZD 163.4mNZD 145.6mNZD 129.7m-10.9%
    Discount factor0.96350.89440.83030.77080.7155-
    Present valueNZD 198.2mNZD 164.0mNZD 135.6mNZD 112.2mNZD 92.8m-17.3%
    Present Value Of The ForecastNZD 702.8m

    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
    Beta0.772Reported 0.659, pulled toward 1.0 (Blume)
    Cost of equity9.98%Risk-free + beta x equity risk premium
    Cost of debt5.35%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationNZD 3.2bn60.9% of capital
    Total debtNZD 2.0bn39.1% of capital, book value as a proxy
    Tax rate21.2%Effective, capped at statutory
    WACC7.72%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 shareNZD -0.84

    28% of EV

    Forecast FCFF, final year
    NZD 129.7m
    Capex at depreciation, working capital in reinvestment
    NZD 28.6m
    Less reinvestment at g/ROIC (32.4% of NOPAT)
    NZD -9.3m
    Capitalised
    NZD 19.4m
    ROIC (WACC floor)
    7.7%
    Terminal value, undiscounted
    NZD 380.2m
    Terminal value, discounted
    NZD 272.0m
    Enterprise value
    NZD 974.9m
    Less net debt
    NZD 1.9bn
    Equity value
    NZD -904.1m

    Exit at 13.2x EBITDA

    Value per shareNZD 0.63

    73% of EV

    Terminal value, undiscounted
    NZD 2.6bn
    Terminal value, discounted
    NZD 1.9bn
    Enterprise value
    NZD 2.6bn
    Less net debt
    NZD 1.9bn
    Equity value
    NZD 681.9m

    Sensitivity

    Value per share (NZD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    5.72%-0.70-0.70-0.70-0.69-0.69
    6.72%-0.78-0.78-0.78-0.78-0.77
    7.72%-0.84-0.84-0.84-0.84-0.84
    8.72%-0.89-0.89-0.89-0.89-0.89
    9.72%-0.94-0.93-0.93-0.93-0.93

    Outlined: this model. Green text: above today's price of 3.65. 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 margin1.1%13.3%+12.2pp
    Discount rate7.7%2.6%-5.2pp
    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.