DCF Studio

    NST.AX · ASX · Basic Materials

    Northern Star Resources Limited

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    AUD 13.91

    Market price

    AUD 22.21

    Implied upside

    -37.4%

    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.
    AdjustedCapital expenditure runs at 31.9% of revenue against depreciation of 18.3%. 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.

    Value Per Share

    Perpetuity growth
    AUD 13.91-37.4%
    Exit multiple
    AUD 31.36+41.2%
    Market price
    AUD 22.21

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (AUD). Outflows negative.

    0m396m791mFY27FY28FY29FY30FY31
    Nominal FCFFDiscounted to todayAUD
    LineFY27FY28FY29FY30FY31CAGR
    RevenueAUD 9.4bnAUD 11.5bnAUD 14.1bnAUD 17.3bnAUD 21.2bn+22.7%
    EBITAUD 2.5bnAUD 3.0bnAUD 3.7bnAUD 4.5bnAUD 5.5bn+22.7%
    NOPATAUD 1.7bnAUD 2.1bnAUD 2.6bnAUD 3.2bnAUD 3.9bn+22.7%
    Add depreciation & amortisationAUD 1.7bnAUD 2.1bnAUD 2.6bnAUD 3.2bnAUD 3.9bn+22.7%
    Less capital expenditureAUD -3.0bnAUD -3.7bnAUD -4.5bnAUD -5.5bnAUD -6.8bn+22.7%
    Less increase in working capitalAUD -93.8mAUD -115.0mAUD -141.1mAUD -173.0mAUD -212.2m+22.7%
    Free cashflow to firmAUD 349.5mAUD 428.7mAUD 525.9mAUD 645.0mAUD 791.1m+22.7%
    Discount factor0.94280.83800.74490.66210.5885-
    Present valueAUD 329.5mAUD 359.3mAUD 391.7mAUD 427.1mAUD 465.6m+9.0%
    Present Value Of The ForecastAUD 2.0bn

    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
    Beta1.260Reported 1.388, pulled toward 1.0 (Blume)
    Cost of equity12.91%Risk-free + beta x equity risk premium
    Cost of debt7.23%Interest expense / average total debt
    Market capitalisationAUD 31.6bn94.8% of capital
    Total debtAUD 1.7bn5.2% of capital, book value as a proxy
    Tax rate30.0%Effective, capped at statutory
    WACC12.50%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 13.91

    90% of EV

    Forecast FCFF, final year
    AUD 791.1m
    Capex at depreciation, working capital in reinvestment
    AUD 3.9bn
    Less reinvestment at g/ROIC (20.0% of NOPAT)
    AUD -776.5m
    Capitalised
    AUD 3.1bn
    ROIC (WACC floor)
    12.5%
    Terminal value, undiscounted
    AUD 31.8bn
    Terminal value, discounted
    AUD 18.7bn
    Enterprise value
    AUD 20.7bn
    Less net debt
    AUD 706.6m
    Equity value
    AUD 20.0bn

    Exit at 7.9x EBITDA

    Value per shareAUD 31.36

    96% of EV

    Terminal value, undiscounted
    AUD 74.5bn
    Terminal value, discounted
    AUD 43.8bn
    Enterprise value
    AUD 45.8bn
    Less net debt
    AUD 706.6m
    Equity value
    AUD 45.1bn

    Spread between methods: 77%.

    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%
    10.50%17.5917.6817.7617.8417.92
    11.50%15.5115.5815.6515.7215.80
    12.50%13.7813.8413.9113.9714.03
    13.50%12.3212.3812.4412.4912.55
    14.50%11.0911.1411.1911.2411.29

    Outlined: this model. Green text: above today's price of 22.21. 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 year22.7%35.0%+12.3pp
    EBIT margin26.2%37.2%+11.0pp
    Discount rate12.5%8.9%-3.6pp
    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.