DCF Studio

    OBM.AX · ASX · Basic Materials

    Ora Banda Mining Limited

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    AUD -0.44

    Market price

    AUD 1.53

    Implied upside

    -129.1%

    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 24.1% of revenue against depreciation of 16.3%. 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 -0.44-129.1%
    Exit multiple
    AUD 1.18-23.1%
    Market price
    AUD 1.53

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (AUD). Outflows negative.

    -645337278-3226686390FY27FY28FY29FY30FY31
    Nominal FCFFDiscounted to todayAUD
    LineFY27FY28FY29FY30FY31CAGR
    RevenueAUD 1.2bnAUD 1.8bnAUD 2.7bnAUD 4.1bnAUD 6.1bn+50.0%
    EBITAUD -18.8mAUD -28.3mAUD -42.4mAUD -63.6mAUD -95.4m-50.0%
    NOPATAUD -15.9mAUD -23.9mAUD -35.8mAUD -53.7mAUD -80.5m-50.0%
    Add depreciation & amortisationAUD 197.1mAUD 295.6mAUD 443.5mAUD 665.2mAUD 997.8m+50.0%
    Less capital expenditureAUD -292.0mAUD -438.0mAUD -657.0mAUD -985.5mAUD -1.5bn+50.0%
    Less increase in working capitalAUD -16.7mAUD -25.0mAUD -37.5mAUD -56.2mAUD -84.3m+50.0%
    Free cashflow to firmAUD -127.5mAUD -191.2mAUD -286.8mAUD -430.2mAUD -645.3m-50.0%
    Discount factor0.94100.83330.73800.65350.5787-
    Present valueAUD -120.0mAUD -159.3mAUD -211.7mAUD -281.2mAUD -373.5m-32.8%
    Present Value Of The ForecastAUD -1.1bn

    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
    Beta1.275Reported 1.410, pulled toward 1.0 (Blume)
    Cost of equity13.00%Risk-free + beta x equity risk premium
    Cost of debt7.35%Implied cost of debt of 14.6% is not a credible funding cost, so risk-free + 2bp is assumed instead. Interest expense and reported debt are measuring different things - common for banks, whose interest expense includes deposits that total debt excludes.
    Market capitalisationAUD 3.0bn98.9% of capital
    Total debtAUD 31.8m1.1% of capital, book value as a proxy
    Tax rate15.6%Effective, capped at statutory
    WACC12.92%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 -0.44

    0% of EV

    Terminal value, undiscounted
    AUD 0.00
    Terminal value, discounted
    AUD 0.00
    Enterprise value
    AUD -1.1bn
    Less net debt
    AUD -235.9m
    Equity value
    AUD -909.6m

    Exit at 6.4x EBITDA

    Value per shareAUD 1.18

    153% of EV

    Terminal value, undiscounted
    AUD 5.7bn
    Terminal value, discounted
    AUD 3.3bn
    Enterprise value
    AUD 2.2bn
    Less net debt
    AUD -235.9m
    Equity value
    AUD 2.4bn

    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%
    10.92%-0.48-0.48-0.48-0.48-0.48
    11.92%-0.46-0.46-0.46-0.46-0.46
    12.92%-0.44-0.44-0.44-0.44-0.44
    13.92%-0.43-0.43-0.43-0.43-0.43
    14.92%-0.42-0.42-0.42-0.42-0.42

    Outlined: this model. Green text: above today's price of 1.53. 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
    EBIT margin-1.6%10.8%+12.4pp
    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.