DCF Studio

    HGH.NZ · NZE · Financial Services

    Heartland Group Holdings Limited

    Also onConsensus Drift

    Implied value per share

    NZD 1.35

    Market price

    NZD 1.25

    Implied upside

    +8.8%

    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.
    AdjustedConsensus rests on as few as 1 analyst estimate(s).
    NoteRisk-free rate is an assumption: NZD assumption - no free live source available for this market.

    Value Per Share

    Perpetuity growth
    NZD 1.35+8.8%
    Exit multiple
    NZD 2.72+118.3%
    Market price
    NZD 1.25

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (NZD). Outflows negative.

    0m46m92mFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayNZD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueNZD 339.8mNZD 361.8mNZD 385.3mNZD 410.2mNZD 436.8m+6.5%
    EBITNZD 130.4mNZD 138.9mNZD 147.8mNZD 157.4mNZD 167.6m+6.5%
    NOPATNZD 93.9mNZD 100.0mNZD 106.4mNZD 113.3mNZD 120.7m+6.5%
    Add depreciation & amortisationNZD 18.4mNZD 19.6mNZD 20.9mNZD 22.2mNZD 23.6m+6.5%
    Less capital expenditureNZD -20.0mNZD -21.3mNZD -22.7mNZD -24.2mNZD -25.7m+6.5%
    Less increase in working capitalNZD -20.7mNZD -22.0mNZD -23.4mNZD -25.0mNZD -26.6m+6.5%
    Free cashflow to firmNZD 71.6mNZD 76.2mNZD 81.2mNZD 86.4mNZD 92.0m+6.5%
    Discount factor0.96330.89400.82960.76990.7145-
    Present valueNZD 69.0mNZD 68.1mNZD 67.3mNZD 66.5mNZD 65.7m-1.2%
    Present Value Of The ForecastNZD 336.7m

    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
    Beta0.839Reported 0.760, pulled toward 1.0 (Blume)
    Cost of equity9.95%Risk-free + beta x equity risk premium
    Cost of debt6.50%Implied cost of debt of 27.5% 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 capitalisationNZD 1.2bn58.4% of capital
    Total debtNZD 839.8m41.6% of capital, book value as a proxy
    Tax rate28.0%Effective, capped at statutory
    WACC7.76%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 1.35

    77% of EV

    Forecast FCFF, final year
    NZD 92.0m
    Capex at depreciation, working capital in reinvestment
    NZD 120.7m
    Less reinvestment at g/ROIC (32.2% of NOPAT)
    NZD -38.9m
    Capitalised
    NZD 81.8m
    ROIC (WACC floor)
    7.8%
    Terminal value, undiscounted
    NZD 1.6bn
    Terminal value, discounted
    NZD 1.1bn
    Enterprise value
    NZD 1.5bn
    Less net debt
    NZD 207.3m
    Equity value
    NZD 1.3bn

    Exit at 17.7x EBITDA

    Value per shareNZD 2.72

    88% of EV

    Terminal value, undiscounted
    NZD 3.4bn
    Terminal value, discounted
    NZD 2.4bn
    Enterprise value
    NZD 2.8bn
    Less net debt
    NZD 207.3m
    Equity value
    NZD 2.5bn

    Spread between methods: 67%.

    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%
    5.76%1.921.931.941.951.96
    6.76%1.591.601.601.611.62
    7.76%1.341.351.351.361.37
    8.76%1.151.161.161.171.17
    9.76%1.001.011.011.021.02

    Outlined: this model. Green text: above today's price of 1.25. 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 year6.5%4.3%-2.2pp
    EBIT margin38.4%35.9%-2.5pp
    Discount rate7.8%8.3%+0.5pp
    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.