DCF Studio

    NIC.AX · ASX · Basic Materials

    Nickel Industries Limited

    Also onConsensus Drift

    Implied value per share

    AUD 0.57

    Market price

    AUD 0.78

    Implied upside

    -26.0%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case · USD model at 1.4042

    AdjustedSome line items were not reported and have been derived. Each one is labelled in the workings below.
    AdjustedReports in USD, trades in AUD. Modelled in USD, converted at the end.
    AdjustedReported capital expenditure averages 2.56% of revenue against depreciation and amortisation of 6.43%. A business cannot depreciate more than it invests indefinitely. Capex has been set to 6.43% of revenue so the forecast is not handed free growth. The accounts do not separate depreciation from amortisation, so the combined charge is used - if a large part of it is amortisation of an acquisition, the reported capex is probably right and this substitution is not. Override it if the reported figure is right.

    Value Per Share

    Perpetuity growth
    AUD 0.57-26.0%
    Exit multiple
    AUD 1.95+151.0%
    Market price
    AUD 0.78

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0m142m284mFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 1.8bnUSD 2.0bnUSD 2.2bnUSD 2.5bnUSD 2.7bn+10.7%
    EBITUSD 237.2mUSD 262.5mUSD 290.5mUSD 321.4mUSD 355.7m+10.7%
    NOPATUSD 217.2mUSD 240.4mUSD 266.0mUSD 294.3mUSD 325.7m+10.7%
    Add depreciation & amortisationUSD 117.4mUSD 129.9mUSD 143.8mUSD 159.1mUSD 176.0m+10.7%
    Less capital expenditureUSD -117.4mUSD -129.9mUSD -143.8mUSD -159.1mUSD -176.0m+10.7%
    Less increase in working capitalUSD -28.1mUSD -31.1mUSD -34.4mUSD -38.1mUSD -42.1m+10.7%
    Free cashflow to firmUSD 189.1mUSD 209.3mUSD 231.6mUSD 256.3mUSD 283.6m+10.7%
    Discount factor0.94720.84980.76250.68410.6138-
    Present valueUSD 179.1mUSD 177.9mUSD 176.6mUSD 175.3mUSD 174.0m-0.7%
    Present Value Of The ForecastUSD 882.9m

    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
    Beta1.029Reported 1.043, pulled toward 1.0 (Blume)
    Cost of equity11.52%Risk-free + beta x equity risk premium
    Cost of debt12.32%Interest expense / average total debt
    Market capitalisationUSD 3.4bn73.3% of capital
    Total debtUSD 1.2bn26.7% of capital, book value as a proxy
    Tax rate8.4%Effective, capped at statutory
    WACC11.46%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 shareUSD 0.41

    67% of EV

    Forecast FCFF, final year
    USD 283.6m
    Capex at depreciation, working capital in reinvestment
    USD 325.7m
    Less reinvestment at g/ROIC (21.8% of NOPAT)
    USD -71.1m
    Capitalised
    USD 254.6m
    ROIC (WACC floor)
    11.5%
    Terminal value, undiscounted
    USD 2.9bn
    Terminal value, discounted
    USD 1.8bn
    Enterprise value
    USD 2.7bn
    Less net debt
    USD 902.8m
    Equity value
    USD 1.8bn

    Exit at 18.4x EBITDA

    Value per shareUSD 1.39

    87% of EV

    Terminal value, undiscounted
    USD 9.8bn
    Terminal value, discounted
    USD 6.0bn
    Enterprise value
    USD 6.9bn
    Less net debt
    USD 902.8m
    Equity value
    USD 6.0bn

    Spread between methods: 109%.

    Sensitivity

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

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    9.46%0.540.550.550.550.55
    10.46%0.470.470.470.470.48
    11.46%0.400.410.410.410.41
    12.46%0.350.350.360.360.36
    13.46%0.310.310.310.310.31

    Outlined: this model. Green text: above today's price of 0.55. 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 year10.7%16.7%+6.0pp
    EBIT margin13.0%15.9%+2.9pp
    Discount rate11.5%9.4%-2.0pp
    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.