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    GNE.AX · ASX · Utilities

    Genesis Energy Limited

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    AUD 1.37

    Market price

    AUD 2.06

    Implied upside

    -33.6%

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

    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.

    Value Per Share

    Perpetuity growth
    AUD 1.37-33.6%
    Exit multiple
    AUD 2.12+2.9%
    Market price
    AUD 2.06

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (NZD). Outflows negative.

    0m137m273mFY27FY28FY29FY30FY31
    Nominal FCFFDiscounted to todayNZD
    LineFY27FY28FY29FY30FY31CAGR
    RevenueNZD 3.0bnNZD 3.2bnNZD 3.3bnNZD 3.5bnNZD 3.7bn+5.7%
    EBITNZD 209.9mNZD 221.9mNZD 234.7mNZD 248.2mNZD 262.4m+5.7%
    NOPATNZD 147.9mNZD 156.4mNZD 165.4mNZD 174.9mNZD 184.9m+5.7%
    Add depreciation & amortisationNZD 251.3mNZD 265.8mNZD 281.0mNZD 297.2mNZD 314.2m+5.7%
    Less capital expenditureNZD -166.2mNZD -175.7mNZD -185.8mNZD -196.5mNZD -207.8m+5.7%
    Less increase in working capitalNZD -14.4mNZD -15.3mNZD -16.1mNZD -17.1mNZD -18.1m+5.7%
    Free cashflow to firmNZD 218.6mNZD 231.2mNZD 244.4mNZD 258.5mNZD 273.3m+5.7%
    Discount factor0.96610.90180.84170.78560.7333-
    Present valueNZD 211.2mNZD 208.4mNZD 205.7mNZD 203.1mNZD 200.4m-1.3%
    Present Value Of The ForecastNZD 1.0bn

    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
    Beta0.535Reported 0.306, pulled toward 1.0 (Blume)
    Cost of equity8.56%Risk-free + beta x equity risk premium
    Cost of debt5.35%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationNZD 2.7bn70.3% of capital
    Total debtNZD 1.1bn29.7% of capital, book value as a proxy
    Tax rate29.5%Effective, capped at statutory
    WACC7.14%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 1.70

    65% of EV

    Forecast FCFF, final year
    NZD 273.3m
    Capex at depreciation, working capital in reinvestment
    NZD 184.9m
    Less reinvestment at g/ROIC (35.0% of NOPAT)
    NZD -64.8m
    Capitalised
    NZD 120.1m
    ROIC (WACC floor)
    7.1%
    Terminal value, undiscounted
    NZD 2.7bn
    Terminal value, discounted
    NZD 1.9bn
    Enterprise value
    NZD 3.0bn
    Less net debt
    NZD 993.4m
    Equity value
    NZD 2.0bn

    Exit at 7.2x EBITDA

    Value per shareNZD 2.64

    75% of EV

    Terminal value, undiscounted
    NZD 4.1bn
    Terminal value, discounted
    NZD 3.0bn
    Enterprise value
    NZD 4.1bn
    Less net debt
    NZD 993.4m
    Equity value
    NZD 3.1bn

    Spread between methods: 43%.

    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%
    5.14%2.582.592.602.622.63
    6.14%2.062.072.082.092.10
    7.14%1.691.701.701.711.72
    8.14%1.401.411.421.421.43
    9.14%1.181.191.191.201.21

    Outlined: this model. Green text: above today's price of 2.56. 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 year5.7%13.7%+8.0pp
    EBIT margin7.0%9.7%+2.7pp
    Discount rate7.1%5.2%-1.9pp
    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.