DCF Studio

    SEK.AX · ASX · Communication Services

    SEEK Limited

    Also onConsensus Drift

    Implied value per share

    AUD 5.04

    Market price

    AUD 11.66

    Implied upside

    -56.8%

    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 5.04-56.8%
    Exit multiple
    AUD 10.85-6.9%
    Market price
    AUD 11.66

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (AUD). Outflows negative.

    0m122m244mFY27FY28FY29FY30FY31
    Nominal FCFFDiscounted to todayAUD
    LineFY27FY28FY29FY30FY31CAGR
    RevenueAUD 1.3bnAUD 1.3bnAUD 1.3bnAUD 1.4bnAUD 1.4bn+1.6%
    EBITAUD 349.3mAUD 354.8mAUD 360.4mAUD 366.1mAUD 371.8m+1.6%
    NOPATAUD 253.4mAUD 257.4mAUD 261.5mAUD 265.6mAUD 269.8m+1.6%
    Add depreciation & amortisationAUD 153.2mAUD 155.7mAUD 158.1mAUD 160.6mAUD 163.1m+1.6%
    Less capital expenditureAUD -178.4mAUD -181.2mAUD -184.1mAUD -187.0mAUD -189.9m+1.6%
    Less increase in working capitalAUD 616.8kAUD 626.5kAUD 636.4kAUD 646.4kAUD 656.6k-1.6%
    Free cashflow to firmAUD 228.9mAUD 232.5mAUD 236.2mAUD 239.9mAUD 243.7m+1.6%
    Discount factor0.95620.87440.79960.73110.6686-
    Present valueAUD 218.9mAUD 203.3mAUD 188.8mAUD 175.4mAUD 162.9m-7.1%
    Present Value Of The ForecastAUD 949.3m

    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
    Beta0.941Reported 0.912, pulled toward 1.0 (Blume)
    Cost of equity10.99%Risk-free + beta x equity risk premium
    Cost of debt5.46%Interest expense / average total debt
    Market capitalisationAUD 4.2bn76.8% of capital
    Total debtAUD 1.3bn23.2% of capital, book value as a proxy
    Tax rate27.4%Effective, capped at statutory
    WACC9.36%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 5.04

    68% of EV

    Forecast FCFF, final year
    AUD 243.7m
    Capex at depreciation, working capital in reinvestment
    AUD 269.8m
    Less reinvestment at g/ROIC (26.7% of NOPAT)
    AUD -72.1m
    Capitalised
    AUD 197.8m
    ROIC (WACC floor)
    9.4%
    Terminal value, undiscounted
    AUD 3.0bn
    Terminal value, discounted
    AUD 2.0bn
    Enterprise value
    AUD 2.9bn
    Less net debt
    AUD 1.1bn
    Equity value
    AUD 1.8bn

    Exit at 11.3x EBITDA

    Value per shareAUD 10.85

    81% of EV

    Terminal value, undiscounted
    AUD 6.1bn
    Terminal value, discounted
    AUD 4.1bn
    Enterprise value
    AUD 5.0bn
    Less net debt
    AUD 1.1bn
    Equity value
    AUD 3.9bn

    Spread between methods: 73%.

    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%
    7.36%7.197.237.277.317.34
    8.36%5.955.996.026.056.08
    9.36%4.985.015.045.065.09
    10.36%4.204.224.254.274.29
    11.36%3.553.573.593.623.64

    Outlined: this model. Green text: above today's price of 11.66. 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 year1.6%16.1%+14.5pp
    EBIT margin26.8%47.7%+20.9pp
    Discount rate9.4%5.6%-3.8pp
    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.