DCF Studio

    SAN.NZ · NZE · Consumer Defensive

    Sanford Limited

    Also onConsensus Drift

    Implied value per share

    NZD 0.12

    Market price

    NZD 6.20

    Implied upside

    -98.0%

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

    Wrong toolThis model values the shares at 2.0% of the market price. A gap that size is a modelling failure rather than a view - most often an unusable beta, a currency or units mismatch, or a cashflow base that does not represent the business. Read the figures below as diagnostics, not as a call.
    AdjustedSome line items were not reported and have been derived. Each one is labelled in the workings below.
    AdjustedConsensus rests on as few as 2 analyst estimate(s).
    AdjustedCapital expenditure runs at 8.4% of revenue against depreciation of 5.6%. 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.
    NoteRisk-free rate is an assumption: NZD assumption - no free live source available for this market.

    Value Per Share

    Perpetuity growth
    NZD 0.12-98.0%
    Exit multiple
    NZD 2.06-66.8%
    Market price
    NZD 6.20

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (NZD). Outflows negative.

    0m3m6mFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayNZD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueNZD 602.6mNZD 621.7mNZD 641.5mNZD 661.8mNZD 682.8m+3.2%
    EBITNZD 15.3mNZD 15.8mNZD 16.3mNZD 16.8mNZD 17.4m+3.2%
    NOPATNZD 11.0mNZD 11.4mNZD 11.8mNZD 12.1mNZD 12.5m+3.2%
    Add depreciation & amortisationNZD 34.0mNZD 35.0mNZD 36.2mNZD 37.3mNZD 38.5m+3.2%
    Less capital expenditureNZD -50.9mNZD -52.5mNZD -54.1mNZD -55.9mNZD -57.6m+3.2%
    Less increase in working capitalNZD 10.9mNZD 11.3mNZD 11.6mNZD 12.0mNZD 12.4m-3.2%
    Free cashflow to firmNZD 5.1mNZD 5.2mNZD 5.4mNZD 5.6mNZD 5.8m+3.2%
    Discount factor0.96450.89720.83460.77640.7222-
    Present valueNZD 4.9mNZD 4.7mNZD 4.5mNZD 4.3mNZD 4.2m-4.0%
    Present Value Of The ForecastNZD 22.6m

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate4.50%NZD assumption - no free live source available for this market (assumption)
    Equity risk premium6.50%Market assumption
    Beta0.583Reported 0.377, pulled toward 1.0 (Blume)
    Cost of equity8.29%Risk-free + beta x equity risk premium
    Cost of debt6.08%Interest expense / average total debt
    Market capitalisationNZD 580.5m79.9% of capital
    Total debtNZD 146.4m20.1% of capital, book value as a proxy
    Tax rate28.0%Effective, capped at statutory
    WACC7.50%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 shareNZD 0.12

    85% of EV

    Forecast FCFF, final year
    NZD 5.8m
    Capex at depreciation, working capital in reinvestment
    NZD 12.5m
    Less reinvestment at g/ROIC (33.3% of NOPAT)
    NZD -4.2m
    Capitalised
    NZD 8.3m
    ROIC (WACC floor)
    7.5%
    Terminal value, undiscounted
    NZD 171.1m
    Terminal value, discounted
    NZD 123.5m
    Enterprise value
    NZD 146.2m
    Less net debt
    NZD 134.8m
    Equity value
    NZD 11.4m

    Exit at 7.6x EBITDA

    Value per shareNZD 2.06

    93% of EV

    Terminal value, undiscounted
    NZD 422.0m
    Terminal value, discounted
    NZD 304.8m
    Enterprise value
    NZD 327.4m
    Less net debt
    NZD 134.8m
    Equity value
    NZD 192.6m

    Spread between methods: 178%.

    Sensitivity

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

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    5.50%0.750.760.770.780.79
    6.50%0.380.390.400.400.41
    7.50%0.110.120.120.130.13
    8.50%-0.10-0.09-0.09-0.08-0.08
    9.50%-0.26-0.25-0.25-0.25-0.24

    Outlined: this model. Green text: above today's price of 6.20. 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 year3.2%21.8%+18.7pp
    EBIT margin2.5%10.9%+8.4pp
    Discount rate7.5%2.7%-4.8pp
    Download as Excel

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    Yahoo Finance and RBA data. General information, not advice. Methodology.