DCF Studio

    SMR.AX · ASX · Basic Materials

    Stanmore Resources Limited

    Also onConsensus Drift

    Implied value per share

    AUD 5.80

    Market price

    AUD 2.68

    Implied upside

    +116.5%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case · USD model at 1.4042

    AdjustedSome line items were not reported and have been derived. Each one is labelled in the workings below.
    AdjustedReports in USD, trades in AUD. Modelled in USD, converted at the end.
    AdjustedReported capital expenditure averages 6.22% of revenue against depreciation and amortisation of 13.99%. A business cannot depreciate more than it invests indefinitely. Capex has been set to 13.99% of revenue so the forecast is not handed free growth. The accounts do not separate depreciation from amortisation, so the combined charge is used - if a large part of it is amortisation of an acquisition, the reported capex is probably right and this substitution is not. Override it if the reported figure is right.
    AdjustedBeta of -0.177 is not usable in a cost of equity. Clamped to 0.30.

    Value Per Share

    Perpetuity growth
    AUD 5.80+116.5%
    Exit multiple
    AUD 3.51+31.1%
    Market price
    AUD 2.68

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0m178m355mFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 1.7bnUSD 1.5bnUSD 1.3bnUSD 1.2bnUSD 1.0bn-11.3%
    EBITUSD 407.7mUSD 361.7mUSD 320.8mUSD 284.5mUSD 252.4m-11.3%
    NOPATUSD 289.1mUSD 256.4mUSD 227.4mUSD 201.7mUSD 178.9m-11.3%
    Add depreciation & amortisationUSD 233.4mUSD 207.0mUSD 183.6mUSD 162.8mUSD 144.4m-11.3%
    Less capital expenditureUSD -233.4mUSD -207.0mUSD -183.6mUSD -162.8mUSD -144.4m-11.3%
    Less increase in working capitalUSD 66.1mUSD 58.6mUSD 52.0mUSD 46.1mUSD 40.9m+11.3%
    Free cashflow to firmUSD 355.2mUSD 315.1mUSD 279.5mUSD 247.9mUSD 219.9m-11.3%
    Discount factor0.96760.90580.84800.79390.7433-
    Present valueUSD 343.7mUSD 285.4mUSD 237.0mUSD 196.8mUSD 163.4m-17.0%
    Present Value Of The ForecastUSD 1.2bn

    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
    Beta0.300Clamped from a reported -0.177
    Cost of equity7.15%Risk-free + beta x equity risk premium
    Cost of debt7.48%Interest expense / average total debt
    Market capitalisationUSD 2.4bn82.0% of capital
    Total debtUSD 531.1m18.0% of capital, book value as a proxy
    Tax rate29.1%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 shareUSD 4.13

    70% of EV

    Forecast FCFF, final year
    USD 219.9m
    Capex at depreciation, working capital in reinvestment
    USD 178.9m
    Less reinvestment at g/ROIC (10.8% of NOPAT)
    USD -19.4m
    Capitalised
    USD 159.6m
    ROIC (reported)
    23.1%
    Terminal value, undiscounted
    USD 3.8bn
    Terminal value, discounted
    USD 2.8bn
    Enterprise value
    USD 4.0bn
    Less net debt
    USD 319.6m
    Equity value
    USD 3.7bn

    Exit at 4.6x EBITDA

    Value per shareUSD 2.50

    52% of EV

    Terminal value, undiscounted
    USD 1.8bn
    Terminal value, discounted
    USD 1.3bn
    Enterprise value
    USD 2.6bn
    Less net debt
    USD 319.6m
    Equity value
    USD 2.3bn

    Spread between methods: 49%.

    Sensitivity

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

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    4.82%5.666.387.408.9911.79
    5.82%4.424.795.285.936.87
    6.82%3.643.864.134.474.91
    7.82%3.113.253.413.613.86
    8.82%2.712.812.923.053.20

    Outlined: this model. Green text: above today's price of 1.91. 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 year-11.3%-27.6%-16.3pp
    EBIT margin24.4%11.6%-12.8pp
    Discount rate6.8%12.7%+5.8pp
    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.