DCF Studio

    MIN.AX · ASX · Basic Materials

    Mineral Resources Limited

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    AUD 37.72

    Market price

    AUD 52.83

    Implied upside

    -28.6%

    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.
    AdjustedFree cashflow is negative in at least one forecast year, so terminal value carries most of the valuation.
    AdjustedCapital expenditure runs at 39.5% of revenue against depreciation of 11.5%. 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 37.72-28.6%
    Exit multiple
    AUD 48.07-9.0%
    Market price
    AUD 52.83

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (AUD). Outflows negative.

    -2627150785-13135753930FY27FY28FY29FY30FY31
    Nominal FCFFDiscounted to todayAUD
    LineFY27FY28FY29FY30FY31CAGR
    RevenueAUD 8.0bnAUD 9.9bnAUD 12.2bnAUD 15.1bnAUD 18.7bn+23.6%
    EBITAUD 1.6bnAUD 2.0bnAUD 2.5bnAUD 3.1bnAUD 3.8bn+23.6%
    NOPATAUD 1.2bnAUD 1.5bnAUD 1.8bnAUD 2.2bnAUD 2.7bn+23.6%
    Add depreciation & amortisationAUD 919.4mAUD 1.1bnAUD 1.4bnAUD 1.7bnAUD 2.1bn+23.6%
    Less capital expenditureAUD -3.2bnAUD -3.9bnAUD -4.8bnAUD -6.0bnAUD -7.4bn+23.6%
    Less increase in working capitalAUD -65.0mAUD -80.4mAUD -99.4mAUD -122.8mAUD -151.9m+23.6%
    Free cashflow to firmAUD -1.1bnAUD -1.4bnAUD -1.7bnAUD -2.1bnAUD -2.6bn-23.6%
    Discount factor0.95390.86800.78980.71870.6540-
    Present valueAUD -1.1bnAUD -1.2bnAUD -1.4bnAUD -1.5bnAUD -1.7bn-12.5%
    Present Value Of The ForecastAUD -6.9bn

    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
    Beta1.074Reported 1.110, pulled toward 1.0 (Blume)
    Cost of equity11.79%Risk-free + beta x equity risk premium
    Cost of debt9.05%Interest expense / average total debt
    Market capitalisationAUD 10.5bn64.3% of capital
    Total debtAUD 5.8bn35.7% of capital, book value as a proxy
    Tax rate28.3%Effective, capped at statutory
    WACC9.90%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 37.72

    159% of EV

    Forecast FCFF, final year
    AUD -2.6bn
    Capex at depreciation, working capital in reinvestment
    AUD 2.7bn
    Less reinvestment at g/ROIC (25.2% of NOPAT)
    AUD -690.3m
    Capitalised
    AUD 2.1bn
    ROIC (reported)
    9.9%
    Terminal value, undiscounted
    AUD 28.5bn
    Terminal value, discounted
    AUD 18.6bn
    Enterprise value
    AUD 11.7bn
    Less net debt
    AUD 4.2bn
    Equity value
    AUD 7.5bn

    Exit at 5.3x EBITDA

    Value per shareAUD 48.07

    150% of EV

    Terminal value, undiscounted
    AUD 31.6bn
    Terminal value, discounted
    AUD 20.7bn
    Enterprise value
    AUD 13.8bn
    Less net debt
    AUD 4.2bn
    Equity value
    AUD 9.6bn

    Spread between methods: 24%.

    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%
    7.90%74.4077.7881.6986.2991.84
    8.90%52.8154.3456.0357.9260.08
    9.90%36.7437.2337.7238.2138.71
    10.90%25.6626.0626.4626.8527.25
    11.90%16.7617.1117.4617.8118.16

    Outlined: this model. Green text: above today's price of 52.83. 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 year23.6%28.6%+4.9pp
    EBIT margin20.5%22.9%+2.4pp
    Discount rate9.9%9.0%-0.8pp
    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.