DCF Studio

    SGM.AX · ASX · Basic Materials

    Sims Limited

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    AUD -1.17

    Market price

    AUD 24.77

    Implied upside

    -104.7%

    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 -1.17-104.7%
    Exit multiple
    AUD 6.91-72.1%
    Market price
    AUD 24.77

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (AUD). Outflows negative.

    0m32m64mFY27FY28FY29FY30FY31
    Nominal FCFFDiscounted to todayAUD
    LineFY27FY28FY29FY30FY31CAGR
    RevenueAUD 8.0bnAUD 8.0bnAUD 8.0bnAUD 7.9bnAUD 7.9bn-0.2%
    EBITAUD 38.3mAUD 38.2mAUD 38.1mAUD 38.0mAUD 38.0m-0.2%
    NOPATAUD 26.8mAUD 26.7mAUD 26.7mAUD 26.6mAUD 26.6m-0.2%
    Add depreciation & amortisationAUD 252.3mAUD 251.7mAUD 251.2mAUD 250.6mAUD 250.0m-0.2%
    Less capital expenditureAUD -220.2mAUD -219.7mAUD -219.2mAUD -218.7mAUD -218.3m-0.2%
    Less increase in working capitalAUD 5.0mAUD 5.0mAUD 5.0mAUD 5.0mAUD 5.0m+0.2%
    Free cashflow to firmAUD 63.9mAUD 63.7mAUD 63.6mAUD 63.5mAUD 63.3m-0.2%
    Discount factor0.94850.85330.76760.69060.6213-
    Present valueAUD 60.6mAUD 54.4mAUD 48.8mAUD 43.8mAUD 39.3m-10.2%
    Present Value Of The ForecastAUD 247.0m

    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
    Beta1.149Reported 1.222, pulled toward 1.0 (Blume)
    Cost of equity12.24%Risk-free + beta x equity risk premium
    Cost of debt6.99%Interest expense / average total debt
    Market capitalisationAUD 4.8bn85.3% of capital
    Total debtAUD 826.7m14.7% of capital, book value as a proxy
    Tax rate30.0%Effective, capped at statutory
    WACC11.16%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 -1.17

    38% of EV

    Forecast FCFF, final year
    AUD 63.3m
    Capex at depreciation, working capital in reinvestment
    AUD 26.6m
    Less reinvestment at g/ROIC (22.4% of NOPAT)
    AUD -6.0m
    Capitalised
    AUD 20.6m
    ROIC (WACC floor)
    11.2%
    Terminal value, undiscounted
    AUD 244.0m
    Terminal value, discounted
    AUD 151.6m
    Enterprise value
    AUD 398.6m
    Less net debt
    AUD 627.1m
    Equity value
    AUD -228.5m

    Exit at 9.7x EBITDA

    Value per shareAUD 6.91

    88% of EV

    Terminal value, undiscounted
    AUD 2.8bn
    Terminal value, discounted
    AUD 1.7bn
    Enterprise value
    AUD 2.0bn
    Less net debt
    AUD 627.1m
    Equity value
    AUD 1.4bn

    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%
    9.16%-0.87-0.87-0.86-0.86-0.85
    10.16%-1.04-1.03-1.03-1.02-1.02
    11.16%-1.17-1.17-1.17-1.16-1.16
    12.16%-1.29-1.29-1.28-1.28-1.28
    13.16%-1.39-1.39-1.39-1.38-1.38

    Outlined: this model. Green text: above today's price of 24.77. 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
    EBIT margin0.5%10.0%+9.5pp
    Discount rate11.2%2.8%-8.4pp
    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.