DCF Studio

    MTLN.L · LSE · Utilities

    Metlen Energy & Metals PLC

    Also onConsensus Drift

    Implied value per share

    EUR 52.40

    Market price

    EUR 44.22

    Implied upside

    +18.5%

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

    AdjustedFree cashflow is negative in at least one forecast year, so terminal value carries most of the valuation.
    AdjustedCapital expenditure runs at 13.6% of revenue against depreciation of 2.3%. 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
    EUR 52.40+18.5%
    Exit multiple
    EUR 84.01+90.0%
    Market price
    EUR 44.22

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (EUR). Outflows negative.

    -159552664-797763320FY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayEUR
    LineFY26FY27FY28FY29FY30CAGR
    RevenueEUR 7.4bnEUR 7.7bnEUR 8.0bnEUR 8.3bnEUR 8.7bn+4.1%
    EBITEUR 904.8mEUR 941.6mEUR 979.9mEUR 1.0bnEUR 1.1bn+4.1%
    NOPATEUR 741.4mEUR 771.6mEUR 802.9mEUR 835.5mEUR 869.5m+4.1%
    Add depreciation & amortisationEUR 170.6mEUR 177.5mEUR 184.7mEUR 192.2mEUR 200.0m+4.1%
    Less capital expenditureEUR -1.0bnEUR -1.0bnEUR -1.1bnEUR -1.1bnEUR -1.2bn+4.1%
    Less increase in working capitalEUR -43.7mEUR -45.4mEUR -47.3mEUR -49.2mEUR -51.2m+4.1%
    Free cashflow to firmEUR -136.1mEUR -141.6mEUR -147.3mEUR -153.3mEUR -159.6m-4.1%
    Discount factor0.96590.90130.84090.78460.7321-
    Present valueEUR -131.4mEUR -127.6mEUR -123.9mEUR -120.3mEUR -116.8m+2.9%
    Present Value Of The ForecastEUR -620.0m

    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
    Beta1.000As reported
    Cost of equity10.00%Risk-free + beta x equity risk premium
    Cost of debt4.50%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationEUR 6.3bn55.3% of capital
    Total debtEUR 5.1bn44.7% of capital, book value as a proxy
    Tax rate18.1%Effective, capped at statutory
    WACC7.18%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 shareEUR 52.40

    106% of EV

    Forecast FCFF, final year
    EUR -159.6m
    Capex at depreciation, working capital in reinvestment
    EUR 905.1m
    Less reinvestment at g/ROIC (21.1% of NOPAT)
    EUR -191.0m
    Capitalised
    EUR 714.0m
    ROIC (reported)
    11.8%
    Terminal value, undiscounted
    EUR 15.6bn
    Terminal value, discounted
    EUR 11.5bn
    Enterprise value
    EUR 10.8bn
    Less net debt
    EUR 3.3bn
    Equity value
    EUR 7.5bn

    Exit at 17.3x EBITDA

    Value per shareEUR 84.01

    104% of EV

    Terminal value, undiscounted
    EUR 21.8bn
    Terminal value, discounted
    EUR 16.0bn
    Enterprise value
    EUR 15.4bn
    Less net debt
    EUR 3.3bn
    Equity value
    EUR 12.0bn

    Spread between methods: 46%.

    Sensitivity

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

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    5.18%93.65106.64124.40150.23191.33
    6.18%63.7970.2778.4789.18103.82
    7.18%44.6448.1752.4057.6064.17
    8.18%31.3933.3835.6938.4141.67
    9.18%21.7222.8524.1325.5827.25

    Outlined: this model. Green text: above today's price of 44.22. 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 year4.1%1.5%-2.5pp
    EBIT margin12.2%11.2%-1.0pp
    Discount rate7.2%7.6%+0.4pp
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    Yahoo Finance and RBA data. General information, not advice. Methodology.