DCF Studio

    LMP.L · LSE · Real Estate

    LondonMetric Property Plc

    Also onConsensus Drift

    Implied value per share

    GBp 1231.11

    Market price

    GBp 178.30

    Implied upside

    +590.5%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case

    AdjustedCapital expenditure runs at 7.1% of revenue against depreciation of 0.3%. 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.
    NoteRisk-free rate is an assumption: GBP assumption - no free live source available for this market.

    Value Per Share

    Perpetuity growth
    GBp 1231.11+590.5%
    Exit multiple
    GBp 1617.71+807.3%
    Market price
    GBp 178.30

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (GBP). Outflows negative.

    0bn1bn3bnFY27FY28FY29FY30FY31
    Nominal FCFFDiscounted to todayGBP
    LineFY27FY28FY29FY30FY31CAGR
    RevenueGBP 682.3mGBP 1.0bnGBP 1.5bnGBP 2.2bnGBP 3.2bn+46.9%
    EBITGBP 613.8mGBP 901.3mGBP 1.3bnGBP 1.9bnGBP 2.9bn+46.9%
    NOPATGBP 610.3mGBP 896.2mGBP 1.3bnGBP 1.9bnGBP 2.8bn+46.9%
    Add depreciation & amortisationGBP 2.0mGBP 2.9mGBP 4.3mGBP 6.3mGBP 9.3m+46.9%
    Less capital expenditureGBP -48.6mGBP -71.4mGBP -104.8mGBP -153.9mGBP -226.0m+46.9%
    Less increase in working capitalGBP 15.4mGBP 22.6mGBP 33.2mGBP 48.7mGBP 71.6m-46.9%
    Free cashflow to firmGBP 579.0mGBP 850.3mGBP 1.2bnGBP 1.8bnGBP 2.7bn+46.9%
    Discount factor0.96180.88980.82310.76140.7044-
    Present valueGBP 556.9mGBP 756.6mGBP 1.0bnGBP 1.4bnGBP 1.9bn+35.9%
    Present Value Of The ForecastGBP 5.6bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate4.50%GBP assumption - no free live source available for this market (assumption)
    Equity risk premium5.50%Market assumption
    Beta1.008Reported 1.012, pulled toward 1.0 (Blume)
    Cost of equity10.04%Risk-free + beta x equity risk premium
    Cost of debt5.30%Interest expense / average total debt
    Market capitalisationGBP 4.3bn59.2% of capital
    Total debtGBP 3.0bn40.8% of capital, book value as a proxy
    Tax rate0.6%Effective, capped at statutory
    WACC8.10%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 shareGBP 12.31

    82% of EV

    Forecast FCFF, final year
    GBP 2.7bn
    Capex at depreciation, working capital in reinvestment
    GBP 2.8bn
    Less reinvestment at g/ROIC (30.9% of NOPAT)
    GBP -876.2m
    Capitalised
    GBP 2.0bn
    ROIC (WACC floor)
    8.1%
    Terminal value, undiscounted
    GBP 35.9bn
    Terminal value, discounted
    GBP 25.3bn
    Enterprise value
    GBP 30.9bn
    Less net debt
    GBP 2.9bn
    Equity value
    GBP 28.0bn

    Exit at 16.9x EBITDA

    Value per shareGBP 16.18

    86% of EV

    Terminal value, undiscounted
    GBP 48.4bn
    Terminal value, discounted
    GBP 34.1bn
    Enterprise value
    GBP 39.7bn
    Less net debt
    GBP 2.9bn
    Equity value
    GBP 36.8bn

    Spread between methods: 27%.

    Sensitivity

    Value per share (GBP) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    6.10%17.2417.3217.4017.4817.55
    7.10%14.3614.4314.4914.5514.62
    8.10%12.2012.2612.3112.3712.42
    9.10%10.5310.5710.6210.6710.71
    10.10%9.199.239.279.319.35

    Outlined: this model. Green text: above today's price of 1.78. 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 year46.9%6.4%-40.5pp
    EBIT margin90.0%20.9%-69.0pp
    Discount rate8.1%27.7%+19.6pp
    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.