DCF Studio

    PRU.AX · ASX · Basic Materials

    Perseus Mining Limited

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    AUD 10.57

    Market price

    AUD 6.59

    Implied upside

    +60.4%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case · USD model at 1.4042

    AdjustedSome line items were not reported and have been derived. Each one is labelled in the workings below.
    AdjustedReports in USD, trades in AUD. Modelled in USD, converted at the end.
    AdjustedCapital expenditure runs at 18.5% of revenue against depreciation of 12.4%. 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 10.57+60.4%
    Exit multiple
    AUD 14.47+119.6%
    Market price
    AUD 6.59

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0m484m968mFY27FY28FY29FY30FY31
    Nominal FCFFDiscounted to todayUSD
    LineFY27FY28FY29FY30FY31CAGR
    RevenueUSD 1.7bnUSD 2.0bnUSD 2.3bnUSD 2.7bnUSD 3.2bn+16.3%
    EBITUSD 768.7mUSD 893.7mUSD 1.0bnUSD 1.2bnUSD 1.4bn+16.3%
    NOPATUSD 587.3mUSD 682.8mUSD 793.9mUSD 923.0mUSD 1.1bn+16.3%
    Add depreciation & amortisationUSD 213.4mUSD 248.1mUSD 288.4mUSD 335.3mUSD 389.9m+16.3%
    Less capital expenditureUSD -319.4mUSD -371.4mUSD -431.8mUSD -502.0mUSD -583.7m+16.3%
    Less increase in working capitalUSD 48.5mUSD 56.4mUSD 65.6mUSD 76.3mUSD 88.7m-16.3%
    Free cashflow to firmUSD 529.8mUSD 615.9mUSD 716.1mUSD 832.6mUSD 968.0m+16.3%
    Discount factor0.94670.84840.76040.68150.6108-
    Present valueUSD 501.5mUSD 522.6mUSD 544.5mUSD 567.4mUSD 591.2m+4.2%
    Present Value Of The ForecastUSD 2.7bn

    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
    Beta1.039Reported 1.058, pulled toward 1.0 (Blume)
    Cost of equity11.58%Risk-free + beta x equity risk premium
    Cost of debt7.35%Implied cost of debt of 489.3% is not a credible funding cost, so risk-free + 2bp is assumed instead. Interest expense and reported debt are measuring different things - common for banks, whose interest expense includes deposits that total debt excludes.
    Market capitalisationUSD 8.7bn100.0% of capital
    Total debtUSD 2.1m0.0% of capital, book value as a proxy
    Tax rate23.6%Effective, capped at statutory
    WACC11.58%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 shareUSD 7.53

    71% of EV

    Forecast FCFF, final year
    USD 968.0m
    Capex at depreciation, working capital in reinvestment
    USD 1.1bn
    Less reinvestment at g/ROIC (11.2% of NOPAT)
    USD -119.8m
    Capitalised
    USD 953.4m
    ROIC (reported)
    22.4%
    Terminal value, undiscounted
    USD 10.8bn
    Terminal value, discounted
    USD 6.6bn
    Enterprise value
    USD 9.3bn
    Less net debt
    USD -921.9m
    Equity value
    USD 10.2bn

    Exit at 9.4x EBITDA

    Value per shareUSD 10.31

    79% of EV

    Terminal value, undiscounted
    USD 16.9bn
    Terminal value, discounted
    USD 10.3bn
    Enterprise value
    USD 13.1bn
    Less net debt
    USD -921.9m
    Equity value
    USD 14.0bn

    Spread between methods: 31%.

    Sensitivity

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

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    9.58%8.929.209.529.8810.30
    10.58%7.988.178.408.658.93
    11.58%7.227.377.537.707.90
    12.58%6.606.716.836.967.10
    13.58%6.096.176.266.356.46

    Outlined: this model. Green text: above today's price of 4.69. 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 year16.3%3.4%-12.8pp
    EBIT margin44.6%26.7%-17.9pp
    Discount rate11.6%17.7%+6.2pp
    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.