DCF Studio

    MNG.L · LSE · Financial Services

    M&G plc

    Also onConsensus Drift

    Implied value per share

    GBp 99.17

    Market price

    GBp 332.10

    Implied upside

    -70.1%

    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.
    AdjustedOnly 3 year(s) of history available to anchor assumptions on.
    AdjustedConsensus rests on as few as 1 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 2.1% of revenue against depreciation of 1.1%. 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 99.17-70.1%
    Exit multiple
    GBp -22.84-106.9%
    Market price
    GBp 332.10

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (GBP). Outflows negative.

    -5678638790-28393193950FY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayGBP
    LineFY26FY27FY28FY29FY30CAGR
    RevenueGBP 27.1bnGBP 33.9bnGBP 42.4bnGBP 53.0bnGBP 66.2bn+25.0%
    EBITGBP 1.1bnGBP 1.4bnGBP 1.8bnGBP 2.2bnGBP 2.7bn+25.0%
    NOPATGBP 842.1mGBP 1.1bnGBP 1.3bnGBP 1.6bnGBP 2.1bn+25.0%
    Add depreciation & amortisationGBP 302.6mGBP 378.1mGBP 472.5mGBP 590.5mGBP 738.0m+25.0%
    Less capital expenditureGBP -574.5mGBP -718.0mGBP -897.3mGBP -1.1bnGBP -1.4bn+25.0%
    Less increase in working capitalGBP -2.9bnGBP -3.6bnGBP -4.5bnGBP -5.7bnGBP -7.1bn+25.0%
    Free cashflow to firmGBP -2.3bnGBP -2.9bnGBP -3.6bnGBP -4.5bnGBP -5.7bn-25.0%
    Discount factor0.96400.89600.83270.77390.7192-
    Present valueGBP -2.2bnGBP -2.6bnGBP -3.0bnGBP -3.5bnGBP -4.1bn-16.1%
    Present Value Of The ForecastGBP -15.5bn

    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
    Beta0.966Reported 0.949, pulled toward 1.0 (Blume)
    Cost of equity9.81%Risk-free + beta x equity risk premium
    Cost of debt6.71%Interest expense / average total debt
    Market capitalisationGBP 8.0bn53.7% of capital
    Total debtGBP 6.9bn46.3% of capital, book value as a proxy
    Tax rate25.0%Effective, capped at statutory
    WACC7.60%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 0.99

    448% of EV

    Forecast FCFF, final year
    GBP -5.7bn
    Capex at depreciation, working capital in reinvestment
    GBP 2.1bn
    Less reinvestment at g/ROIC (32.9% of NOPAT)
    GBP -675.8m
    Capitalised
    GBP 1.4bn
    ROIC (WACC floor)
    7.6%
    Terminal value, undiscounted
    GBP 27.7bn
    Terminal value, discounted
    GBP 19.9bn
    Enterprise value
    GBP 4.4bn
    Less net debt
    GBP 2.0bn
    Equity value
    GBP 2.4bn

    Exit at 6.8x EBITDA

    Value per shareGBP -0.23

    1170% of EV

    Terminal value, undiscounted
    GBP 23.5bn
    Terminal value, discounted
    GBP 16.9bn
    Enterprise value
    GBP 1.4bn
    Less net debt
    GBP 2.0bn
    Equity value
    GBP -561.9m

    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%
    5.60%4.404.454.514.574.63
    6.60%2.362.412.452.502.55
    7.60%0.910.950.991.031.07
    8.60%-0.15-0.12-0.08-0.05-0.02
    9.60%-0.95-0.92-0.89-0.86-0.83

    Outlined: this model. Green text: above today's price of 3.32. 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 year25.0%-25.1%-50.0pp
    EBIT margin4.1%5.1%+0.9pp
    Discount rate7.6%6.1%-1.5pp
    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.