DCF Studio

    RHC.AX · ASX · Healthcare

    Ramsay Health Care Limited

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    AUD 9.16

    Market price

    AUD 55.39

    Implied upside

    -83.5%

    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.

    Value Per Share

    Perpetuity growth
    AUD 9.16-83.5%
    Exit multiple
    AUD 90.95+64.2%
    Market price
    AUD 55.39

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (AUD). Outflows negative.

    0bn1bn1bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayAUD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueAUD 19.5bnAUD 21.6bnAUD 23.9bnAUD 26.4bnAUD 29.2bn+10.5%
    EBITAUD 754.6mAUD 834.2mAUD 922.2mAUD 1.0bnAUD 1.1bn+10.5%
    NOPATAUD 528.2mAUD 583.9mAUD 645.5mAUD 713.6mAUD 788.9m+10.5%
    Add depreciation & amortisationAUD 1.3bnAUD 1.4bnAUD 1.6bnAUD 1.8bnAUD 1.9bn+10.5%
    Less capital expenditureAUD -938.4mAUD -1.0bnAUD -1.1bnAUD -1.3bnAUD -1.4bn+10.5%
    Less increase in working capitalAUD 837.5kAUD 925.8kAUD 1.0mAUD 1.1mAUD 1.3m-10.5%
    Free cashflow to firmAUD 892.5mAUD 986.6mAUD 1.1bnAUD 1.2bnAUD 1.3bn+10.5%
    Discount factor0.96750.90580.84790.79380.7431-
    Present valueAUD 863.5mAUD 893.6mAUD 924.8mAUD 957.1mAUD 990.5m+3.5%
    Present Value Of The ForecastAUD 4.6bn

    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
    Beta0.732Reported 0.600, pulled toward 1.0 (Blume)
    Cost of equity9.74%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 12.8bn51.3% of capital
    Total debtAUD 12.1bn48.7% of capital, book value as a proxy
    Tax rate30.0%Effective, capped at statutory
    WACC6.82%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 9.16

    66% of EV

    Forecast FCFF, final year
    AUD 1.3bn
    Capex at depreciation, working capital in reinvestment
    AUD 788.9m
    Less reinvestment at g/ROIC (36.6% of NOPAT)
    AUD -289.1m
    Capitalised
    AUD 499.8m
    ROIC (WACC floor)
    6.8%
    Terminal value, undiscounted
    AUD 11.9bn
    Terminal value, discounted
    AUD 8.8bn
    Enterprise value
    AUD 13.4bn
    Less net debt
    AUD 11.3bn
    Equity value
    AUD 2.1bn

    Exit at 12.1x EBITDA

    Value per shareAUD 90.95

    86% of EV

    Terminal value, undiscounted
    AUD 37.1bn
    Terminal value, discounted
    AUD 27.6bn
    Enterprise value
    AUD 32.2bn
    Less net debt
    AUD 11.3bn
    Equity value
    AUD 20.9bn

    Spread between methods: 163%.

    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%
    4.82%30.3430.6330.9231.2131.50
    5.82%17.7417.9718.2018.4318.65
    6.82%8.798.979.169.359.54
    7.82%2.092.252.402.562.72
    8.82%-3.12-2.99-2.85-2.72-2.59

    Outlined: this model. Green text: above today's price of 55.39. 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 year10.5%26.1%+15.5pp
    EBIT margin3.9%7.4%+3.5pp
    Discount rate6.8%4.2%-2.6pp
    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.