DCF Studio

    ORG.AX · ASX · Utilities

    Origin Energy Limited

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    AUD 1.72

    Market price

    AUD 11.66

    Implied upside

    -85.3%

    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 5.5% of revenue against depreciation of 3.4%. 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 1.72-85.3%
    Exit multiple
    AUD 4.89-58.1%
    Market price
    AUD 11.66

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (AUD). Outflows negative.

    0m188m375mFY27FY28FY29FY30FY31
    Nominal FCFFDiscounted to todayAUD
    LineFY27FY28FY29FY30FY31CAGR
    RevenueAUD 15.1bnAUD 14.8bnAUD 14.5bnAUD 14.2bnAUD 14.0bn-2.0%
    EBITAUD 823.3mAUD 807.1mAUD 791.2mAUD 775.7mAUD 760.4m-2.0%
    NOPATAUD 676.4mAUD 663.1mAUD 650.0mAUD 637.3mAUD 624.7m-2.0%
    Add depreciation & amortisationAUD 511.7mAUD 501.6mAUD 491.8mAUD 482.1mAUD 472.6m-2.0%
    Less capital expenditureAUD -827.1mAUD -810.8mAUD -794.9mAUD -779.3mAUD -763.9m-2.0%
    Less increase in working capitalAUD 14.3mAUD 14.1mAUD 13.8mAUD 13.5mAUD 13.2m+2.0%
    Free cashflow to firmAUD 375.3mAUD 368.0mAUD 360.7mAUD 353.6mAUD 346.7m-2.0%
    Discount factor0.96120.88810.82060.75810.7005-
    Present valueAUD 360.8mAUD 326.8mAUD 296.0mAUD 268.1mAUD 242.8m-9.4%
    Present Value Of The ForecastAUD 1.5bn

    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
    Beta0.640Reported 0.462, pulled toward 1.0 (Blume)
    Cost of equity9.19%Risk-free + beta x equity risk premium
    Cost of debt5.35%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationAUD 20.1bn80.1% of capital
    Total debtAUD 5.0bn19.9% of capital, book value as a proxy
    Tax rate17.8%Effective, capped at statutory
    WACC8.23%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 1.72

    78% of EV

    Forecast FCFF, final year
    AUD 346.7m
    Capex at depreciation, working capital in reinvestment
    AUD 624.7m
    Less reinvestment at g/ROIC (30.4% of NOPAT)
    AUD -189.7m
    Capitalised
    AUD 435.0m
    ROIC (WACC floor)
    8.2%
    Terminal value, undiscounted
    AUD 7.8bn
    Terminal value, discounted
    AUD 5.4bn
    Enterprise value
    AUD 6.9bn
    Less net debt
    AUD 4.0bn
    Equity value
    AUD 3.0bn

    Exit at 12.6x EBITDA

    Value per shareAUD 4.89

    88% of EV

    Terminal value, undiscounted
    AUD 15.6bn
    Terminal value, discounted
    AUD 10.9bn
    Enterprise value
    AUD 12.4bn
    Less net debt
    AUD 4.0bn
    Equity value
    AUD 8.4bn

    Spread between methods: 96%.

    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%
    6.23%3.093.113.133.153.18
    7.23%2.292.312.322.342.36
    8.23%1.681.701.721.731.75
    9.23%1.221.231.241.251.27
    10.23%0.840.850.860.870.89

    Outlined: this model. Green text: above today's price of 11.66. 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 year-2.0%29.9%+31.9pp
    EBIT margin5.4%16.9%+11.5pp
    Discount rate8.2%3.9%-4.3pp
    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.