DCF Studio

    FSF.NZ · NZE · Financial Services

    Fonterra Shareholders Fund

    Also onConsensus Drift

    Implied value per share

    NZD -0.10

    Market price

    NZD 8.15

    Implied upside

    -101.2%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case

    Wrong toolThis is a financial. Banks and insurers report no meaningful operating income, and capex and working capital do not mean what a free-cashflow model assumes, so a DCF will misprice it. The model below runs on best-effort numbers - treat it as an illustration, not a valuation.
    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.
    AdjustedReported capital expenditure averages just 0.00% of revenue, which is too low to be the company's real investment - property trusts and similar structures invest through lines that are not reported as capex. Capex has been set to 1.00% of revenue so the forecast is not handed free growth. The accounts do not separate depreciation from amortisation, so the combined charge is used - if a large part of it is amortisation of an acquisition, the reported capex is probably right and this substitution is not. Override it if the reported figure is right.
    AdjustedFree cashflow is negative in at least one forecast year, so terminal value carries most of the valuation.
    AdjustedCapital expenditure runs at 1.0% of revenue against depreciation of 0.0%. 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.
    NoteRisk-free rate is an assumption: NZD assumption - no free live source available for this market.

    No usable EV/EBITDA (EBITDA is not positive), so the exit multiple falls back to 8x.

    Value Per Share

    Perpetuity growth
    NZD -0.10-101.2%
    Exit multiple
    NZD -0.10-101.2%
    Market price
    NZD 8.15

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (NZD). Outflows negative.

    -5087813-25439060FY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayNZD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueNZD 100.5mNZD 150.8mNZD 226.1mNZD 339.2mNZD 508.8m+50.0%
    EBITNZD 0.00NZD 0.00NZD 0.00NZD 0.00NZD 0.00-
    NOPATNZD 0.00NZD 0.00NZD 0.00NZD 0.00NZD 0.00-
    Add depreciation & amortisationNZD 0.00NZD 0.00NZD 0.00NZD 0.00NZD 0.00-
    Less capital expenditureNZD -1.0mNZD -1.5mNZD -2.3mNZD -3.4mNZD -5.1m+50.0%
    Less increase in working capitalNZD 0.00NZD 0.00NZD 0.00NZD 0.00NZD 0.00-
    Free cashflow to firmNZD -1.0mNZD -1.5mNZD -2.3mNZD -3.4mNZD -5.1m-50.0%
    Discount factor0.96470.89780.83550.77750.7236-
    Present valueNZD -969.5kNZD -1.4mNZD -1.9mNZD -2.6mNZD -3.7m-39.6%
    Present Value Of The ForecastNZD -10.5m

    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
    Beta0.455Reported 0.186, pulled toward 1.0 (Blume)
    Cost of equity7.46%Risk-free + beta x equity risk premium
    Cost of debt6.50%Assumed: risk-free + 2bp (interest expense not reported)
    Market capitalisationNZD 875.4m100.0% of capital
    Total debtNZD 0.000.0% of capital, book value as a proxy
    Tax rate28.0%Effective, capped at statutory
    WACC7.46%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 -0.10

    0% of EV

    Terminal value, undiscounted
    NZD 0.00
    Terminal value, discounted
    NZD 0.00
    Enterprise value
    NZD -10.5m
    Less net debt
    NZD 0.00
    Equity value
    NZD -10.5m

    Exit at 8.0x EBITDA

    Value per shareNZD -0.10

    0% of EV

    Terminal value, undiscounted
    NZD 0.00
    Terminal value, discounted
    NZD 0.00
    Enterprise value
    NZD -10.5m
    Less net debt
    NZD 0.00
    Equity value
    NZD -10.5m

    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%
    5.46%-0.10-0.10-0.10-0.10-0.10
    6.46%-0.10-0.10-0.10-0.10-0.10
    7.46%-0.10-0.10-0.10-0.10-0.10
    8.46%-0.10-0.10-0.10-0.10-0.10
    9.46%-0.09-0.09-0.09-0.09-0.09

    Outlined: this model. Green text: above today's price of 8.15. 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 margin0.0%20.1%+20.1pp
    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.