DCF Studio

    GGP.AX · ASX · Basic Materials

    Greatland Resources Limited

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    AUD 70.29

    Market price

    AUD 11.05

    Implied upside

    +536.1%

    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 2 year(s) of history available to anchor assumptions on.
    AdjustedCapital expenditure runs at 19.6% of revenue against depreciation of 5.3%. 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 70.29+536.1%
    Exit multiple
    AUD 49.95+352.0%
    Market price
    AUD 11.05

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (AUD). Outflows negative.

    0bn2bn3bnFY27FY28FY29FY30FY31
    Nominal FCFFDiscounted to todayAUD
    LineFY27FY28FY29FY30FY31CAGR
    RevenueAUD 3.4bnAUD 5.1bnAUD 7.6bnAUD 11.4bnAUD 17.2bn+50.0%
    EBITAUD 1.7bnAUD 2.5bnAUD 3.8bnAUD 5.7bnAUD 8.5bn+50.0%
    NOPATAUD 1.2bnAUD 1.8bnAUD 2.8bnAUD 4.1bnAUD 6.2bn+50.0%
    Add depreciation & amortisationAUD 180.4mAUD 270.7mAUD 406.0mAUD 609.0mAUD 913.4m+50.0%
    Less capital expenditureAUD -663.0mAUD -994.4mAUD -1.5bnAUD -2.2bnAUD -3.4bn+50.0%
    Less increase in working capitalAUD -109.4mAUD -164.1mAUD -246.1mAUD -369.2mAUD -553.8m+50.0%
    Free cashflow to firmAUD 636.3mAUD 954.4mAUD 1.4bnAUD 2.1bnAUD 3.2bn+50.0%
    Discount factor0.94770.85130.76470.68680.6169-
    Present valueAUD 603.0mAUD 812.5mAUD 1.1bnAUD 1.5bnAUD 2.0bn+34.7%
    Present Value Of The ForecastAUD 6.0bn

    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
    Beta1.000As reported
    Cost of equity11.35%Risk-free + beta x equity risk premium
    Cost of debt7.35%Implied cost of debt of 30.3% is not a credible funding cost, so risk-free + 2bp is assumed instead. Interest expense and reported debt are measuring different things - common for banks, whose interest expense includes deposits that total debt excludes.
    Market capitalisationAUD 7.5bn99.7% of capital
    Total debtAUD 22.2m0.3% of capital, book value as a proxy
    Tax rate27.0%Effective, capped at statutory
    WACC11.33%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 70.29

    87% of EV

    Forecast FCFF, final year
    AUD 3.2bn
    Capex at depreciation, working capital in reinvestment
    AUD 6.2bn
    Less reinvestment at g/ROIC (7.9% of NOPAT)
    AUD -491.1m
    Capitalised
    AUD 5.7bn
    ROIC (reported)
    31.7%
    Terminal value, undiscounted
    AUD 66.5bn
    Terminal value, discounted
    AUD 41.0bn
    Enterprise value
    AUD 47.0bn
    Less net debt
    AUD -1.3bn
    Equity value
    AUD 48.2bn

    Exit at 4.7x EBITDA

    Value per shareAUD 49.95

    82% of EV

    Terminal value, undiscounted
    AUD 43.8bn
    Terminal value, discounted
    AUD 27.0bn
    Enterprise value
    AUD 33.0bn
    Less net debt
    AUD -1.3bn
    Equity value
    AUD 34.3bn

    Spread between methods: 34%.

    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%
    9.33%85.9290.0894.85100.35106.78
    10.33%74.5277.5580.9584.8189.23
    11.33%65.5167.7870.2973.0976.24
    12.33%58.2359.9661.8663.9566.27
    13.33%52.2453.5855.0456.6458.38

    Outlined: this model. Green text: above today's price of 11.05. 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 year50.0%-3.4%-53.4pp
    EBIT margin49.6%11.2%-38.4pp
    Discount rate11.3%41.2%+29.8pp
    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.