DCF Studio

    GPT.AX · ASX · Real Estate

    The GPT Group

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    AUD 2.62

    Market price

    AUD 4.46

    Implied upside

    -41.3%

    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.
    AdjustedReported capital expenditure averages just 0.87% 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.
    AdjustedCapital expenditure runs at 1.0% of revenue against depreciation of 0.8%. 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 21.5x 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 2.62-41.3%
    Exit multiple
    AUD 5.60+25.5%
    Market price
    AUD 4.46

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (AUD). Outflows negative.

    0m445m890mFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayAUD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueAUD 1.1bnAUD 1.2bnAUD 1.3bnAUD 1.4bnAUD 1.6bn+8.8%
    EBITAUD 675.4mAUD 734.5mAUD 798.9mAUD 868.8mAUD 944.9m+8.8%
    NOPATAUD 663.5mAUD 721.6mAUD 784.8mAUD 853.5mAUD 928.3m+8.8%
    Add depreciation & amortisationAUD 8.9mAUD 9.7mAUD 10.6mAUD 11.5mAUD 12.5m+8.8%
    Less capital expenditureAUD -11.2mAUD -12.2mAUD -13.3mAUD -14.4mAUD -15.7m+8.8%
    Less increase in working capitalAUD -24.9mAUD -27.1mAUD -29.4mAUD -32.0mAUD -34.8m+8.8%
    Free cashflow to firmAUD 636.4mAUD 692.1mAUD 752.7mAUD 818.6mAUD 890.3m+8.8%
    Discount factor0.95870.88110.80980.74430.6840-
    Present valueAUD 610.1mAUD 609.8mAUD 609.5mAUD 609.3mAUD 609.0m-0.0%
    Present Value Of The ForecastAUD 3.0bn

    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
    Beta0.959Reported 0.939, pulled toward 1.0 (Blume)
    Cost of equity11.10%Risk-free + beta x equity risk premium
    Cost of debt5.35%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationAUD 8.5bn60.7% of capital
    Total debtAUD 5.5bn39.3% of capital, book value as a proxy
    Tax rate1.8%Effective, capped at statutory
    WACC8.81%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 2.62

    71% of EV

    Forecast FCFF, final year
    AUD 890.3m
    Capex at depreciation, working capital in reinvestment
    AUD 928.3m
    Less reinvestment at g/ROIC (28.4% of NOPAT)
    AUD -263.5m
    Capitalised
    AUD 664.7m
    ROIC (WACC floor)
    8.8%
    Terminal value, undiscounted
    AUD 10.8bn
    Terminal value, discounted
    AUD 7.4bn
    Enterprise value
    AUD 10.4bn
    Less net debt
    AUD 5.4bn
    Equity value
    AUD 5.0bn

    Exit at 20.0x EBITDA

    Value per shareAUD 5.60

    81% of EV

    Terminal value, undiscounted
    AUD 19.1bn
    Terminal value, discounted
    AUD 13.1bn
    Enterprise value
    AUD 16.1bn
    Less net debt
    AUD 5.4bn
    Equity value
    AUD 10.7bn

    Spread between methods: 73%.

    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%
    6.81%4.214.234.264.294.31
    7.81%3.293.313.333.353.38
    8.81%2.582.602.622.642.65
    9.81%2.012.032.052.062.08
    10.81%1.561.571.581.601.61

    Outlined: this model. Green text: above today's price of 4.46. 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 year8.8%16.3%+7.5pp
    EBIT margin60.2%80.3%+20.1pp
    Discount rate8.8%6.6%-2.2pp
    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.