DCF Studio

    GMD.AX · ASX · Basic Materials

    Genesis Minerals Limited

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    AUD -1.24

    Market price

    AUD 7.60

    Implied upside

    -116.3%

    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.
    AdjustedFree cashflow is negative in at least one forecast year, so terminal value carries most of the valuation.
    AdjustedCapital expenditure runs at 22.0% of revenue against depreciation of 10.6%. 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.

    Value Per Share

    Perpetuity growth
    AUD -1.24-116.3%
    Exit multiple
    AUD 5.83-23.3%
    Market price
    AUD 7.60

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (AUD). Outflows negative.

    -1361451264-6807256320FY27FY28FY29FY30FY31
    Nominal FCFFDiscounted to todayAUD
    LineFY27FY28FY29FY30FY31CAGR
    RevenueAUD 2.6bnAUD 3.9bnAUD 5.9bnAUD 8.8bnAUD 13.2bn+50.0%
    EBITAUD 44.3mAUD 66.5mAUD 99.7mAUD 149.6mAUD 224.4m+50.0%
    NOPATAUD 32.7mAUD 49.0mAUD 73.5mAUD 110.3mAUD 165.4m+50.0%
    Add depreciation & amortisationAUD 276.1mAUD 414.2mAUD 621.3mAUD 932.0mAUD 1.4bn+50.0%
    Less capital expenditureAUD -575.2mAUD -862.9mAUD -1.3bnAUD -1.9bnAUD -2.9bn+50.0%
    Less increase in working capitalAUD -2.5mAUD -3.8mAUD -5.6mAUD -8.4mAUD -12.7m+50.0%
    Free cashflow to firmAUD -268.9mAUD -403.4mAUD -605.1mAUD -907.6mAUD -1.4bn-50.0%
    Discount factor0.94410.84160.75020.66880.5961-
    Present valueAUD -253.9mAUD -339.5mAUD -454.0mAUD -607.0mAUD -811.6m-33.7%
    Present Value Of The ForecastAUD -2.5bn

    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
    Beta1.178Reported 1.266, pulled toward 1.0 (Blume)
    Cost of equity12.42%Risk-free + beta x equity risk premium
    Cost of debt7.13%Interest expense / average total debt
    Market capitalisationAUD 8.9bn96.7% of capital
    Total debtAUD 302.8m3.3% of capital, book value as a proxy
    Tax rate26.3%Effective, capped at statutory
    WACC12.18%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 -1.24

    -56% of EV

    Forecast FCFF, final year
    AUD -1.4bn
    Capex at depreciation, working capital in reinvestment
    AUD 165.4m
    Less reinvestment at g/ROIC (15.4% of NOPAT)
    AUD -25.5m
    Capitalised
    AUD 139.9m
    ROIC (reported)
    16.2%
    Terminal value, undiscounted
    AUD 1.5bn
    Terminal value, discounted
    AUD 883.0m
    Enterprise value
    AUD -1.6bn
    Less net debt
    AUD -185.5m
    Equity value
    AUD -1.4bn

    Exit at 9.2x EBITDA

    Value per shareAUD 5.83

    139% of EV

    Terminal value, undiscounted
    AUD 14.9bn
    Terminal value, discounted
    AUD 8.9bn
    Enterprise value
    AUD 6.4bn
    Less net debt
    AUD -185.5m
    Equity value
    AUD 6.6bn

    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%
    10.18%-1.14-1.11-1.08-1.04-0.99
    11.18%-1.22-1.20-1.17-1.15-1.12
    12.18%-1.27-1.25-1.24-1.22-1.20
    13.18%-1.30-1.29-1.28-1.27-1.26
    14.18%-1.32-1.31-1.31-1.30-1.29

    Outlined: this model. Green text: above today's price of 7.60. 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 margin1.7%16.0%+14.3pp
    Discount rate12.2%3.6%-8.6pp
    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.