DCF Studio

    PLS.AX · ASX · Basic Materials

    PLS Group Limited

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    AUD 0.55

    Market price

    AUD 4.17

    Implied upside

    -86.8%

    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 37.5% of revenue against depreciation of 13.4%. 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 0.55-86.8%
    Exit multiple
    AUD 0.87-79.1%
    Market price
    AUD 4.17

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (AUD). Outflows negative.

    0m30m60mFY27FY28FY29FY30FY31
    Nominal FCFFDiscounted to todayAUD
    LineFY27FY28FY29FY30FY31CAGR
    RevenueAUD 1.1bnAUD 774.5mAUD 549.3mAUD 389.6mAUD 276.3m-29.1%
    EBITAUD 433.9mAUD 307.8mAUD 218.3mAUD 154.8mAUD 109.8m-29.1%
    NOPATAUD 303.7mAUD 215.4mAUD 152.8mAUD 108.4mAUD 76.9m-29.1%
    Add depreciation & amortisationAUD 146.1mAUD 103.6mAUD 73.5mAUD 52.1mAUD 37.0m-29.1%
    Less capital expenditureAUD -409.5mAUD -290.4mAUD -206.0mAUD -146.1mAUD -103.6m-29.1%
    Less increase in working capitalAUD 19.4mAUD 13.8mAUD 9.8mAUD 6.9mAUD 4.9m+29.1%
    Free cashflow to firmAUD 59.9mAUD 42.5mAUD 30.1mAUD 21.4mAUD 15.1m-29.1%
    Discount factor0.95340.86670.78780.71610.6510-
    Present valueAUD 57.1mAUD 36.8mAUD 23.7mAUD 15.3mAUD 9.9m-35.5%
    Present Value Of The ForecastAUD 142.7m

    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
    Beta0.835Reported 0.753, pulled toward 1.0 (Blume)
    Cost of equity10.36%Risk-free + beta x equity risk premium
    Cost of debt8.92%Interest expense / average total debt
    Market capitalisationAUD 13.5bn91.6% of capital
    Total debtAUD 1.2bn8.4% of capital, book value as a proxy
    Tax rate30.0%Effective, capped at statutory
    WACC10.01%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 0.55

    80% of EV

    Forecast FCFF, final year
    AUD 15.1m
    Capex at depreciation, working capital in reinvestment
    AUD 76.9m
    Less reinvestment at g/ROIC (14.1% of NOPAT)
    AUD -10.8m
    Capitalised
    AUD 66.0m
    ROIC (reported)
    17.8%
    Terminal value, undiscounted
    AUD 901.4m
    Terminal value, discounted
    AUD 586.8m
    Enterprise value
    AUD 729.5m
    Less net debt
    AUD -1.1bn
    Equity value
    AUD 1.8bn

    Exit at 17.2x EBITDA

    Value per shareAUD 0.87

    92% of EV

    Terminal value, undiscounted
    AUD 2.5bn
    Terminal value, discounted
    AUD 1.6bn
    Enterprise value
    AUD 1.8bn
    Less net debt
    AUD -1.1bn
    Equity value
    AUD 2.8bn

    Spread between methods: 46%.

    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%
    8.01%0.610.620.640.650.68
    9.01%0.570.580.590.600.61
    10.01%0.540.540.550.560.56
    11.01%0.510.520.520.530.53
    12.01%0.490.500.500.500.51

    Outlined: this model. Green text: above today's price of 4.17. 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-29.1%30.0%+59.1pp
    Discount rate10.0%3.0%-7.0pp
    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.