DCF Studio

    PFI.NZ · NZE · Real Estate

    Property For Industry Limited

    Also onConsensus Drift

    Implied value per share

    NZD 2.92

    Market price

    NZD 2.25

    Implied upside

    +29.7%

    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.
    AdjustedReported capital expenditure averages just 0.39% of revenue, which is too low to be the company's real investment - property trusts and similar structures invest through lines that are not reported as capex. Capex has been set to 1.00% 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.
    AdjustedCapital expenditure runs at 1.0% of revenue against depreciation of 0.3%. 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: NZD assumption - no free live source available for this market.

    Value Per Share

    Perpetuity growth
    NZD 2.92+29.7%
    Exit multiple
    NZD 3.89+72.7%
    Market price
    NZD 2.25

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (NZD). Outflows negative.

    0m72m144mFY27FY28FY29FY30FY31
    Nominal FCFFDiscounted to todayNZD
    LineFY27FY28FY29FY30FY31CAGR
    RevenueNZD 157.7mNZD 172.3mNZD 188.1mNZD 205.5mNZD 224.4m+9.2%
    EBITNZD 117.1mNZD 127.9mNZD 139.6mNZD 152.5mNZD 166.6m+9.2%
    NOPATNZD 101.5mNZD 110.9mNZD 121.1mNZD 132.3mNZD 144.5m+9.2%
    Add depreciation & amortisationNZD 543.3kNZD 593.5kNZD 648.2kNZD 707.9kNZD 773.2k+9.2%
    Less capital expenditureNZD -1.6mNZD -1.7mNZD -1.9mNZD -2.1mNZD -2.2m+9.2%
    Less increase in working capitalNZD 828.4kNZD 904.8kNZD 988.2kNZD 1.1mNZD 1.2m-9.2%
    Free cashflow to firmNZD 101.3mNZD 110.7mNZD 120.9mNZD 132.0mNZD 144.2m+9.2%
    Discount factor0.96920.91040.85510.80330.7545-
    Present valueNZD 98.2mNZD 100.8mNZD 103.4mNZD 106.1mNZD 108.8m+2.6%
    Present Value Of The ForecastNZD 517.2m

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate4.50%NZD assumption - no free live source available for this market (assumption)
    Equity risk premium6.50%Market assumption
    Beta0.574Reported 0.364, pulled toward 1.0 (Blume)
    Cost of equity8.23%Risk-free + beta x equity risk premium
    Cost of debt4.50%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationNZD 1.1bn59.1% of capital
    Total debtNZD 783.2m40.9% of capital, book value as a proxy
    Tax rate13.3%Effective, capped at statutory
    WACC6.46%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 shareNZD 2.92

    77% of EV

    Forecast FCFF, final year
    NZD 144.2m
    Capex at depreciation, working capital in reinvestment
    NZD 144.5m
    Less reinvestment at g/ROIC (38.7% of NOPAT)
    NZD -55.9m
    Capitalised
    NZD 88.6m
    ROIC (WACC floor)
    6.5%
    Terminal value, undiscounted
    NZD 2.3bn
    Terminal value, discounted
    NZD 1.7bn
    Enterprise value
    NZD 2.2bn
    Less net debt
    NZD 781.0m
    Equity value
    NZD 1.5bn

    Exit at 17.5x EBITDA

    Value per shareNZD 3.89

    81% of EV

    Terminal value, undiscounted
    NZD 2.9bn
    Terminal value, discounted
    NZD 2.2bn
    Enterprise value
    NZD 2.7bn
    Less net debt
    NZD 781.0m
    Equity value
    NZD 2.0bn

    Spread between methods: 28%.

    Sensitivity

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

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    4.46%4.914.934.964.995.01
    5.46%3.713.733.753.773.79
    6.46%2.882.902.922.942.95
    7.46%2.282.302.312.322.34
    8.46%1.821.831.851.861.87

    Outlined: this model. Green text: above today's price of 2.25. 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 year9.2%5.4%-3.8pp
    EBIT margin74.2%63.1%-11.1pp
    Discount rate6.5%7.6%+1.1pp
    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.