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    Implied value per share

    USD 146.38

    Market price

    USD 296.31

    Implied upside

    -50.6%

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

    AdjustedReported capital expenditure averages 9.04% of revenue against depreciation and amortisation of 22.66%. A business cannot depreciate more than it invests indefinitely. Capex has been set to 22.66% 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
    USD 146.38-50.6%
    Exit multiple
    USD 324.76+9.6%
    Market price
    USD 296.31

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn2bn3bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 5.1bnUSD 5.3bnUSD 5.6bnUSD 5.8bnUSD 6.1bn+4.9%
    EBITUSD 2.5bnUSD 2.6bnUSD 2.7bnUSD 2.9bnUSD 3.0bn+4.9%
    NOPATUSD 2.5bnUSD 2.6bnUSD 2.7bnUSD 2.9bnUSD 3.0bn+4.9%
    Add depreciation & amortisationUSD 1.1bnUSD 1.2bnUSD 1.3bnUSD 1.3bnUSD 1.4bn+4.9%
    Less capital expenditureUSD -1.1bnUSD -1.2bnUSD -1.3bnUSD -1.3bnUSD -1.4bn+4.9%
    Less increase in working capitalUSD 3.3mUSD 3.5mUSD 3.6mUSD 3.8mUSD 4.0m-4.9%
    Free cashflow to firmUSD 2.5bnUSD 2.6bnUSD 2.7bnUSD 2.9bnUSD 3.0bn+4.9%
    Discount factor0.95590.87350.79820.72940.6665-
    Present valueUSD 2.4bnUSD 2.3bnUSD 2.2bnUSD 2.1bnUSD 2.0bn-4.2%
    Present Value Of The ForecastUSD 10.9bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta0.956Reported 0.935, pulled toward 1.0 (Blume)
    Cost of equity10.26%Risk-free + beta x equity risk premium
    Cost of debt5.00%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationUSD 55.4bn84.4% of capital
    Total debtUSD 10.3bn15.6% of capital, book value as a proxy
    Tax rate0.3%Effective, capped at statutory
    WACC9.43%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 146.38

    69% of EV

    Forecast FCFF, final year
    USD 3.0bn
    Capex at depreciation, working capital in reinvestment
    USD 3.0bn
    Less reinvestment at g/ROIC (16.4% of NOPAT)
    USD -491.4m
    Capitalised
    USD 2.5bn
    ROIC (reported)
    15.3%
    Terminal value, undiscounted
    USD 37.1bn
    Terminal value, discounted
    USD 24.8bn
    Enterprise value
    USD 35.7bn
    Less net debt
    USD 9.9bn
    Equity value
    USD 25.7bn

    Exit at 19.1x EBITDA

    Value per shareUSD 324.76

    84% of EV

    Terminal value, undiscounted
    USD 84.2bn
    Terminal value, discounted
    USD 56.1bn
    Enterprise value
    USD 67.1bn
    Less net debt
    USD 9.9bn
    Equity value
    USD 57.1bn

    Spread between methods: 76%.

    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%
    7.43%199.28210.26223.39239.39259.35
    8.43%163.65170.50178.43187.76198.89
    9.43%136.98141.39146.38152.10158.71
    10.43%116.26119.15122.37125.97130.04
    11.43%99.69101.61103.69105.99108.53

    Outlined: this model. Green text: above today's price of 296.31. 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 year4.9%18.7%+13.9pp
    EBIT margin49.2%85.6%+36.4pp
    Discount rate9.4%6.4%-3.1pp
    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.