DCF Studio

    SKL.NZ · NZE · Industrials

    Skellerup Holdings Limited

    Also onConsensus Drift

    Implied value per share

    NZD 4.33

    Market price

    NZD 7.40

    Implied upside

    -41.5%

    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.
    AdjustedConsensus rests on as few as 2 analyst estimate(s).
    NoteRisk-free rate is an assumption: NZD assumption - no free live source available for this market.

    Value Per Share

    Perpetuity growth
    NZD 4.33-41.5%
    Exit multiple
    NZD 7.73+4.5%
    Market price
    NZD 7.40

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (NZD). Outflows negative.

    0m33m66mFY27FY28FY29FY30FY31
    Nominal FCFFDiscounted to todayNZD
    LineFY27FY28FY29FY30FY31CAGR
    RevenueNZD 411.0mNZD 433.0mNZD 456.2mNZD 480.6mNZD 506.3m+5.4%
    EBITNZD 70.6mNZD 74.4mNZD 78.4mNZD 82.6mNZD 87.0m+5.4%
    NOPATNZD 52.2mNZD 55.0mNZD 57.9mNZD 61.0mNZD 64.3m+5.4%
    Add depreciation & amortisationNZD 19.4mNZD 20.4mNZD 21.5mNZD 22.6mNZD 23.9m+5.4%
    Less capital expenditureNZD -12.1mNZD -12.8mNZD -13.5mNZD -14.2mNZD -14.9m+5.4%
    Less increase in working capitalNZD -5.8mNZD -6.1mNZD -6.4mNZD -6.8mNZD -7.1m+5.4%
    Free cashflow to firmNZD 53.7mNZD 56.5mNZD 59.6mNZD 62.8mNZD 66.1m+5.4%
    Discount factor0.95990.88450.81510.75110.6921-
    Present valueNZD 51.5mNZD 50.0mNZD 48.5mNZD 47.1mNZD 45.8m-2.9%
    Present Value Of The ForecastNZD 242.9m

    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
    Beta0.646Reported 0.471, pulled toward 1.0 (Blume)
    Cost of equity8.70%Risk-free + beta x equity risk premium
    Cost of debt4.50%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationNZD 1.5bn96.8% of capital
    Total debtNZD 48.4m3.2% of capital, book value as a proxy
    Tax rate26.1%Effective, capped at statutory
    WACC8.52%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 4.33

    73% of EV

    Forecast FCFF, final year
    NZD 66.1m
    Capex at depreciation, working capital in reinvestment
    NZD 64.3m
    Less reinvestment at g/ROIC (15.3% of NOPAT)
    NZD -9.8m
    Capitalised
    NZD 54.5m
    ROIC (reported)
    16.4%
    Terminal value, undiscounted
    NZD 927.4m
    Terminal value, discounted
    NZD 641.9m
    Enterprise value
    NZD 884.8m
    Less net debt
    NZD 28.4m
    Equity value
    NZD 856.4m

    Exit at 17.1x EBITDA

    Value per shareNZD 7.73

    84% of EV

    Terminal value, undiscounted
    NZD 1.9bn
    Terminal value, discounted
    NZD 1.3bn
    Enterprise value
    NZD 1.6bn
    Less net debt
    NZD 28.4m
    Equity value
    NZD 1.5bn

    Spread between methods: 56%.

    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%
    6.52%5.635.996.426.987.73
    7.52%4.704.925.175.485.86
    8.52%4.044.174.334.514.73
    9.52%3.543.633.733.843.97
    10.52%3.153.213.273.353.43

    Outlined: this model. Green text: above today's price of 7.40. 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 year5.4%19.8%+14.4pp
    EBIT margin17.2%29.1%+11.9pp
    Discount rate8.5%6.0%-2.5pp
    Download as Excel

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