DCF Studio

    ILU.AX · ASX · Basic Materials

    Iluka Resources Limited

    Also onConsensus Drift

    Implied value per share

    AUD -0.69

    Market price

    AUD 6.06

    Implied upside

    -111.3%

    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.
    AdjustedConsensus rests on as few as 2 analyst estimate(s).
    AdjustedFree cashflow is negative in at least one forecast year, so terminal value carries most of the valuation.
    AdjustedCapital expenditure runs at 38.3% of revenue against depreciation of 15.3%. 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 -0.69-111.3%
    Exit multiple
    AUD 0.46-92.4%
    Market price
    AUD 6.06

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (AUD). Outflows negative.

    -50853237-254266190FY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayAUD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueAUD 870.5mAUD 746.4mAUD 639.9mAUD 548.6mAUD 470.3m-14.3%
    EBITAUD 269.1mAUD 230.7mAUD 197.8mAUD 169.6mAUD 145.4m-14.3%
    NOPATAUD 191.3mAUD 164.0mAUD 140.6mAUD 120.6mAUD 103.4m-14.3%
    Add depreciation & amortisationAUD 133.4mAUD 114.3mAUD 98.0mAUD 84.0mAUD 72.1m-14.3%
    Less capital expenditureAUD -333.5mAUD -285.9mAUD -245.1mAUD -210.2mAUD -180.2m-14.3%
    Less increase in working capitalAUD -42.0mAUD -36.0mAUD -30.9mAUD -26.5mAUD -22.7m-14.3%
    Free cashflow to firmAUD -50.9mAUD -43.6mAUD -37.4mAUD -32.0mAUD -27.5m+14.3%
    Discount factor0.96000.88490.81560.75170.6928-
    Present valueAUD -48.8mAUD -38.6mAUD -30.5mAUD -24.1mAUD -19.0m+21.0%
    Present Value Of The ForecastAUD -161.0m

    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
    Beta0.865Reported 0.799, pulled toward 1.0 (Blume)
    Cost of equity10.54%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 2.6bn69.7% of capital
    Total debtAUD 1.1bn30.3% of capital, book value as a proxy
    Tax rate28.9%Effective, capped at statutory
    WACC8.50%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 -0.69

    120% of EV

    Forecast FCFF, final year
    AUD -27.5m
    Capex at depreciation, working capital in reinvestment
    AUD 103.4m
    Less reinvestment at g/ROIC (21.7% of NOPAT)
    AUD -22.4m
    Capitalised
    AUD 81.0m
    ROIC (reported)
    11.5%
    Terminal value, undiscounted
    AUD 1.4bn
    Terminal value, discounted
    AUD 958.8m
    Enterprise value
    AUD 797.8m
    Less net debt
    AUD 1.1bn
    Equity value
    AUD -294.0m

    Exit at 9.6x EBITDA

    Value per shareAUD 0.46

    112% of EV

    Terminal value, undiscounted
    AUD 2.1bn
    Terminal value, discounted
    AUD 1.5bn
    Enterprise value
    AUD 1.3bn
    Less net debt
    AUD 1.1bn
    Equity value
    AUD 197.9m

    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%
    6.50%0.270.470.711.021.43
    7.50%-0.37-0.26-0.130.020.21
    8.50%-0.81-0.75-0.69-0.61-0.51
    9.50%-1.15-1.11-1.08-1.03-0.99
    10.50%-1.40-1.38-1.36-1.34-1.32

    Outlined: this model. Green text: above today's price of 6.06. 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 year-14.3%11.6%+25.8pp
    EBIT margin30.9%88.1%+57.1pp
    Discount rate8.5%4.3%-4.2pp
    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.