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    LONN.SW · EBS · Healthcare

    Lonza Group AG

    Also onConsensus Drift

    Implied value per share

    CHF 316.06

    Market price

    CHF 545.60

    Implied upside

    -42.1%

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

    AdjustedCapital expenditure runs at 25.5% of revenue against depreciation of 10.8%. 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.
    NoteRisk-free rate is an assumption: CHF assumption - no free live source available for this market.

    Value Per Share

    Perpetuity growth
    CHF 316.06-42.1%
    Exit multiple
    CHF 393.10-28.0%
    Market price
    CHF 545.60

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (CHF). Outflows negative.

    0m18m35mFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayCHF
    LineFY26FY27FY28FY29FY30CAGR
    RevenueCHF 6.6bnCHF 6.7bnCHF 6.9bnCHF 7.0bnCHF 7.1bn+1.6%
    EBITCHF 1.2bnCHF 1.2bnCHF 1.2bnCHF 1.2bnCHF 1.3bn+1.6%
    NOPATCHF 1.0bnCHF 1.0bnCHF 1.0bnCHF 1.1bnCHF 1.1bn+1.6%
    Add depreciation & amortisationCHF 714.8mCHF 726.4mCHF 738.2mCHF 750.1mCHF 762.3m+1.6%
    Less capital expenditureCHF -1.7bnCHF -1.7bnCHF -1.7bnCHF -1.8bnCHF -1.8bn+1.6%
    Less increase in working capitalCHF 214.6kCHF 218.1kCHF 221.6kCHF 225.2kCHF 228.9k-1.6%
    Free cashflow to firmCHF 32.8mCHF 33.4mCHF 33.9mCHF 34.4mCHF 35.0m+1.6%
    Discount factor0.97520.92750.88210.83890.7979-
    Present valueCHF 32.0mCHF 30.9mCHF 29.9mCHF 28.9mCHF 27.9m-3.4%
    Present Value Of The ForecastCHF 149.7m

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate0.50%CHF assumption - no free live source available for this market (assumption)
    Equity risk premium5.50%Market assumption
    Beta0.894Reported 0.842, pulled toward 1.0 (Blume)
    Cost of equity5.42%Risk-free + beta x equity risk premium
    Cost of debt3.37%Interest expense / average total debt
    Market capitalisationCHF 38.1bn89.4% of capital
    Total debtCHF 4.5bn10.6% of capital, book value as a proxy
    Tax rate15.0%Effective, capped at statutory
    WACC5.15%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 shareCHF 316.06

    99% of EV

    Forecast FCFF, final year
    CHF 35.0m
    Capex at depreciation, working capital in reinvestment
    CHF 1.3bn
    Less reinvestment at g/ROIC (33.2% of NOPAT)
    CHF -416.6m
    Capitalised
    CHF 837.1m
    ROIC (reported)
    7.5%
    Terminal value, undiscounted
    CHF 32.4bn
    Terminal value, discounted
    CHF 25.9bn
    Enterprise value
    CHF 26.0bn
    Less net debt
    CHF 3.8bn
    Equity value
    CHF 22.2bn

    Exit at 19.3x EBITDA

    Value per shareCHF 393.10

    100% of EV

    Terminal value, undiscounted
    CHF 39.2bn
    Terminal value, discounted
    CHF 31.3bn
    Enterprise value
    CHF 31.4bn
    Less net debt
    CHF 3.8bn
    Equity value
    CHF 27.6bn

    Spread between methods: 22%.

    Sensitivity

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

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    3.15%714.27962.151591.936516.37—
    4.15%404.34466.51565.85750.971220.94
    5.15%265.13286.70316.06358.66426.55
    6.15%186.39194.18203.85216.32233.15
    7.15%135.95138.03140.37143.06146.25

    Outlined: this model. Green text: above today's price of 545.60. 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 year1.6%11.9%+10.3pp
    EBIT margin17.9%28.7%+10.8pp
    Discount rate5.1%4.2%-0.9pp
    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.