DCF Studio

    PNI.AX · ASX · Financial Services

    Pinnacle Investment Management Group Limited

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    AUD 15.38

    Market price

    AUD 13.86

    Implied upside

    +11.0%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case

    Wrong toolThis is a financial. Banks and insurers report no meaningful operating income, and capex and working capital do not mean what a free-cashflow model assumes, so a DCF will misprice it. The model below runs on best-effort numbers - treat it as an illustration, not a valuation.
    AdjustedSome line items were not reported and have been derived. Each one is labelled in the workings below.

    Value Per Share

    Perpetuity growth
    AUD 15.38+11.0%
    Exit multiple
    AUD 28.51+105.7%
    Market price
    AUD 13.86

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (AUD). Outflows negative.

    0m239m477mFY27FY28FY29FY30FY31
    Nominal FCFFDiscounted to todayAUD
    LineFY27FY28FY29FY30FY31CAGR
    RevenueAUD 106.8mAUD 131.5mAUD 162.1mAUD 199.7mAUD 246.0m+23.2%
    EBITAUD 208.5mAUD 256.9mAUD 316.5mAUD 390.0mAUD 480.5m+23.2%
    NOPATAUD 203.0mAUD 250.1mAUD 308.1mAUD 379.6mAUD 467.7m+23.2%
    Add depreciation & amortisationAUD 3.6mAUD 4.4mAUD 5.5mAUD 6.7mAUD 8.3m+23.2%
    Less capital expenditureAUD -1.9mAUD -2.4mAUD -2.9mAUD -3.6mAUD -4.5m+23.2%
    Less increase in working capitalAUD 2.4mAUD 3.0mAUD 3.7mAUD 4.5mAUD 5.6m-23.2%
    Free cashflow to firmAUD 207.1mAUD 255.1mAUD 314.3mAUD 387.3mAUD 477.1m+23.2%
    Discount factor0.94480.84340.75280.67200.5999-
    Present valueAUD 195.6mAUD 215.2mAUD 236.6mAUD 260.3mAUD 286.2m+10.0%
    Present Value Of The ForecastAUD 1.2bn

    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
    Beta1.205Reported 1.306, pulled toward 1.0 (Blume)
    Cost of equity12.58%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 3.3bn92.5% of capital
    Total debtAUD 270.4m7.5% of capital, book value as a proxy
    Tax rate2.7%Effective, capped at statutory
    WACC12.03%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 15.38

    67% of EV

    Forecast FCFF, final year
    AUD 477.1m
    Capex at depreciation, working capital in reinvestment
    AUD 467.7m
    Less reinvestment at g/ROIC (18.3% of NOPAT)
    AUD -85.4m
    Capitalised
    AUD 382.3m
    ROIC (reported)
    13.7%
    Terminal value, undiscounted
    AUD 4.1bn
    Terminal value, discounted
    AUD 2.5bn
    Enterprise value
    AUD 3.7bn
    Less net debt
    AUD 180.9m
    Equity value
    AUD 3.5bn

    Exit at 18.5x EBITDA

    Value per shareAUD 28.51

    82% of EV

    Terminal value, undiscounted
    AUD 9.1bn
    Terminal value, discounted
    AUD 5.4bn
    Enterprise value
    AUD 6.6bn
    Less net debt
    AUD 180.9m
    Equity value
    AUD 6.5bn

    Spread between methods: 60%.

    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%
    10.03%19.0019.3319.7120.1420.62
    11.03%16.8617.0717.2917.5417.82
    12.03%15.1215.2515.3815.5315.68
    13.03%13.7013.7613.8413.9113.99
    14.03%12.5212.5612.6012.6412.68

    Outlined: this model. Green text: above today's price of 13.86. 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 year23.2%20.5%-2.7pp
    Discount rate12.0%13.0%+1.0pp
    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.