DCF Studio

    FPH.AX · ASX · Healthcare

    Fisher & Paykel Healthcare Corporation Limited

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    AUD 1.68

    Market price

    AUD 35.21

    Implied upside

    -95.2%

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

    Wrong toolThis model values the shares at 4.8% of the market price. A gap that size is a modelling failure rather than a view - most often an unusable beta, a currency or units mismatch, or a cashflow base that does not represent the business. Read the figures below as diagnostics, not as a call.
    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.
    AdjustedFree cashflow is negative in at least one forecast year, so terminal value carries most of the valuation.
    AdjustedCapital expenditure runs at 12.3% of revenue against depreciation of 7.6%. 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 32.1x 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 1.68-95.2%
    Exit multiple
    AUD 9.83-72.1%
    Market price
    AUD 35.21

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (NZD). Outflows negative.

    -30742406-153712030FY27FY28FY29FY30FY31
    Nominal FCFFDiscounted to todayNZD
    LineFY27FY28FY29FY30FY31CAGR
    RevenueNZD 2.6bnNZD 3.0bnNZD 3.4bnNZD 3.8bnNZD 4.3bn+13.3%
    EBITNZD 139.5mNZD 158.0mNZD 179.0mNZD 202.7mNZD 229.6m+13.3%
    NOPATNZD 104.0mNZD 117.8mNZD 133.5mNZD 151.2mNZD 171.2m+13.3%
    Add depreciation & amortisationNZD 199.6mNZD 226.0mNZD 256.0mNZD 290.0mNZD 328.5m+13.3%
    Less capital expenditureNZD -320.8mNZD -363.4mNZD -411.6mNZD -466.2mNZD -528.1m+13.3%
    Less increase in working capitalNZD -1.4mNZD -1.6mNZD -1.8mNZD -2.1mNZD -2.4m+13.3%
    Free cashflow to firmNZD -18.7mNZD -21.2mNZD -24.0mNZD -27.1mNZD -30.7m-13.3%
    Discount factor0.94960.85620.77210.69620.6277-
    Present valueNZD -17.7mNZD -18.1mNZD -18.5mNZD -18.9mNZD -19.3m-2.1%
    Present Value Of The ForecastNZD -92.5m

    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
    Beta0.932Reported 0.899, pulled toward 1.0 (Blume)
    Cost of equity10.94%Risk-free + beta x equity risk premium
    Cost of debt6.88%Interest expense / average total debt
    Market capitalisationNZD 20.7bn99.3% of capital
    Total debtNZD 146.1m0.7% of capital, book value as a proxy
    Tax rate25.4%Effective, capped at statutory
    WACC10.90%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 2.09

    110% of EV

    Forecast FCFF, final year
    NZD -30.7m
    Capex at depreciation, working capital in reinvestment
    NZD 171.2m
    Less reinvestment at g/ROIC (22.9% of NOPAT)
    NZD -39.3m
    Capitalised
    NZD 131.9m
    ROIC (WACC floor)
    10.9%
    Terminal value, undiscounted
    NZD 1.6bn
    Terminal value, discounted
    NZD 1.0bn
    Enterprise value
    NZD 918.0m
    Less net debt
    NZD -315.0m
    Equity value
    NZD 1.2bn

    Exit at 20.0x EBITDA

    Value per shareNZD 12.24

    101% of EV

    Terminal value, undiscounted
    NZD 11.2bn
    Terminal value, discounted
    NZD 7.0bn
    Enterprise value
    NZD 6.9bn
    Less net debt
    NZD -315.0m
    Equity value
    NZD 7.2bn

    Spread between methods: 142%.

    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%
    8.90%2.682.712.752.792.84
    9.90%2.322.342.352.362.38
    10.90%2.072.082.092.102.10
    11.90%1.871.881.881.891.90
    12.90%1.701.711.721.721.73

    Outlined: this model. Green text: above today's price of 43.83. 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 margin5.3%91.6%+86.2pp
    Discount rate10.9%3.0%-7.9pp
    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.