DCF Studio

    FBU.NZ · NZE · Basic Materials

    Fletcher Building Limited

    Also onConsensus Drift

    Implied value per share

    NZD -0.83

    Market price

    NZD 3.68

    Implied upside

    -122.5%

    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.
    NoteRisk-free rate is an assumption: NZD assumption - no free live source available for this market.

    Value Per Share

    Perpetuity growth
    NZD -0.83-122.5%
    Exit multiple
    NZD 0.93-74.6%
    Market price
    NZD 3.68

    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 factor0.96450.89730.83470.77650.7224-
    Present valueNZD 198.4mNZD 164.5mNZD 136.4mNZD 113.0mNZD 93.7m-17.1%
    Present Value Of The ForecastNZD 706.0m

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate4.50%NZD assumption - no free live source available for this market (assumption)
    Equity risk premium6.50%Market assumption
    Beta0.772Reported 0.659, pulled toward 1.0 (Blume)
    Cost of equity9.51%Risk-free + beta x equity risk premium
    Cost of debt4.50%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationNZD 4.0bn66.2% of capital
    Total debtNZD 2.0bn33.8% of capital, book value as a proxy
    Tax rate21.2%Effective, capped at statutory
    WACC7.49%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 -0.83

    29% of EV

    Forecast FCFF, final year
    NZD 129.7m
    Capex at depreciation, working capital in reinvestment
    NZD 28.6m
    Less reinvestment at g/ROIC (33.4% of NOPAT)
    NZD -9.6m
    Capitalised
    NZD 19.1m
    ROIC (WACC floor)
    7.5%
    Terminal value, undiscounted
    NZD 391.8m
    Terminal value, discounted
    NZD 283.0m
    Enterprise value
    NZD 989.0m
    Less net debt
    NZD 1.9bn
    Equity value
    NZD -890.0m

    Exit at 15.3x EBITDA

    Value per shareNZD 0.93

    76% of EV

    Terminal value, undiscounted
    NZD 3.0bn
    Terminal value, discounted
    NZD 2.2bn
    Enterprise value
    NZD 2.9bn
    Less net debt
    NZD 1.9bn
    Equity value
    NZD 1.0bn

    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%
    5.49%-0.68-0.68-0.67-0.67-0.67
    6.49%-0.76-0.76-0.76-0.76-0.76
    7.49%-0.83-0.83-0.83-0.83-0.83
    8.49%-0.88-0.88-0.88-0.88-0.88
    9.49%-0.93-0.93-0.92-0.92-0.92

    Outlined: this model. Green text: above today's price of 3.68. 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%13.0%+11.9pp
    Discount rate7.5%2.6%-4.9pp
    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.