DCF Studio

    PPT.AX · ASX · Financial Services

    Perpetual Limited

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    AUD 18.08

    Market price

    AUD 19.60

    Implied upside

    -7.7%

    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.
    AdjustedReported capital expenditure averages 2.13% of revenue against depreciation and amortisation of 8.35%. A business cannot depreciate more than it invests indefinitely. Capex has been set to 8.35% 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.

    Value Per Share

    Perpetuity growth
    AUD 18.08-7.7%
    Exit multiple
    AUD 55.80+184.7%
    Market price
    AUD 19.60

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (AUD). Outflows negative.

    0m97m195mFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayAUD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueAUD 1.6bnAUD 2.0bnAUD 2.4bnAUD 2.9bnAUD 3.5bn+21.3%
    EBITAUD 185.9mAUD 225.6mAUD 273.8mAUD 332.2mAUD 403.1m+21.3%
    NOPATAUD 130.2mAUD 157.9mAUD 191.6mAUD 232.5mAUD 282.1m+21.3%
    Add depreciation & amortisationAUD 136.6mAUD 165.8mAUD 201.2mAUD 244.1mAUD 296.2m+21.3%
    Less capital expenditureAUD -136.6mAUD -165.8mAUD -201.2mAUD -244.1mAUD -296.2m+21.3%
    Less increase in working capitalAUD -40.3mAUD -48.8mAUD -59.3mAUD -71.9mAUD -87.3m+21.3%
    Free cashflow to firmAUD 89.9mAUD 109.1mAUD 132.4mAUD 160.6mAUD 194.9m+21.3%
    Discount factor0.95890.88180.81080.74560.6856-
    Present valueAUD 86.2mAUD 96.2mAUD 107.3mAUD 119.8mAUD 133.6m+11.6%
    Present Value Of The ForecastAUD 543.1m

    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
    Beta0.903Reported 0.855, pulled toward 1.0 (Blume)
    Cost of equity10.77%Risk-free + beta x equity risk premium
    Cost of debt6.70%Interest expense / average total debt
    Market capitalisationAUD 2.3bn66.8% of capital
    Total debtAUD 1.1bn33.2% of capital, book value as a proxy
    Tax rate30.0%Effective, capped at statutory
    WACC8.75%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 18.08

    81% of EV

    Forecast FCFF, final year
    AUD 194.9m
    Capex at depreciation, working capital in reinvestment
    AUD 282.1m
    Less reinvestment at g/ROIC (28.6% of NOPAT)
    AUD -80.6m
    Capitalised
    AUD 201.5m
    ROIC (WACC floor)
    8.7%
    Terminal value, undiscounted
    AUD 3.3bn
    Terminal value, discounted
    AUD 2.3bn
    Enterprise value
    AUD 2.8bn
    Less net debt
    AUD 783.1m
    Equity value
    AUD 2.0bn

    Exit at 13.5x EBITDA

    Value per shareAUD 55.80

    92% of EV

    Terminal value, undiscounted
    AUD 9.5bn
    Terminal value, discounted
    AUD 6.5bn
    Enterprise value
    AUD 7.0bn
    Less net debt
    AUD 783.1m
    Equity value
    AUD 6.3bn

    Spread between methods: 102%.

    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%
    6.75%26.3426.4826.6126.7526.89
    7.75%21.5521.6721.7921.9022.02
    8.75%17.8917.9918.0818.1818.28
    9.75%14.9915.0715.1615.2415.33
    10.75%12.6412.7212.7912.8712.94

    Outlined: this model. Green text: above today's price of 19.60. 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 year21.3%23.0%+1.7pp
    EBIT margin11.4%12.0%+0.6pp
    Discount rate8.7%8.3%-0.4pp
    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.