DCF Studio

    SOL.AX · ASX · Financial Services

    Washington H. Soul Pattinson and Company Limited

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    AUD -0.18

    Market price

    AUD 45.08

    Implied upside

    -100.4%

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

    Wrong toolThis is a financial. Banks and insurers report no meaningful operating income, and capex and working capital do not mean what a free-cashflow model assumes, so a DCF will misprice it. The model below runs on best-effort numbers - treat it as an illustration, not a valuation.
    AdjustedSome line items were not reported and have been derived. Each one is labelled in the workings below.
    AdjustedConsensus rests on as few as 1 analyst estimate(s).
    AdjustedFree cashflow is negative in at least one forecast year, so terminal value carries most of the valuation.
    AdjustedCapital expenditure runs at 28.5% of revenue against depreciation of 10.0%. 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.

    No usable EV/EBITDA (EBITDA is not positive), so the exit multiple falls back to 8x.

    Value Per Share

    Perpetuity growth
    AUD -0.18-100.4%
    Exit multiple
    AUD -0.20-100.4%
    Market price
    AUD 45.08

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (AUD). Outflows negative.

    -98401967-492009840FY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayAUD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueAUD 381.2mAUD 236.9mAUD 147.3mAUD 91.5mAUD 56.9m-37.8%
    EBITAUD -43.6mAUD -27.1mAUD -16.8mAUD -10.5mAUD -6.5m+37.8%
    NOPATAUD -36.1mAUD -22.4mAUD -13.9mAUD -8.7mAUD -5.4m+37.8%
    Add depreciation & amortisationAUD 38.2mAUD 23.7mAUD 14.8mAUD 9.2mAUD 5.7m-37.8%
    Less capital expenditureAUD -108.8mAUD -67.6mAUD -42.0mAUD -26.1mAUD -16.2m-37.8%
    Less increase in working capitalAUD 8.2mAUD 5.1mAUD 3.2mAUD 2.0mAUD 1.2m+37.8%
    Free cashflow to firmAUD -98.4mAUD -61.2mAUD -38.0mAUD -23.6mAUD -14.7m+37.8%
    Discount factor0.96290.89290.82790.76770.7119-
    Present valueAUD -94.8mAUD -54.6mAUD -31.5mAUD -18.1mAUD -10.5m+42.4%
    Present Value Of The ForecastAUD -209.4m

    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
    Beta0.438Reported 0.161, pulled toward 1.0 (Blume)
    Cost of equity7.98%Risk-free + beta x equity risk premium
    Cost of debt6.82%Interest expense / average total debt
    Market capitalisationAUD 17.1bn94.4% of capital
    Total debtAUD 1.0bn5.6% of capital, book value as a proxy
    Tax rate17.3%Effective, capped at statutory
    WACC7.85%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 -0.18

    0% of EV

    Terminal value, undiscounted
    AUD 0.00
    Terminal value, discounted
    AUD 0.00
    Enterprise value
    AUD -209.4m
    Less net debt
    AUD -150.0m
    Equity value
    AUD -59.4m

    Exit at 8.0x EBITDA

    Value per shareAUD -0.20

    2% of EV

    Terminal value, undiscounted
    AUD -6.4m
    Terminal value, discounted
    AUD -4.6m
    Enterprise value
    AUD -214.0m
    Less net debt
    AUD -150.0m
    Equity value
    AUD -64.0m

    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%
    5.85%-0.20-0.20-0.20-0.20-0.20
    6.85%-0.19-0.19-0.19-0.19-0.19
    7.85%-0.18-0.18-0.18-0.18-0.18
    8.85%-0.17-0.17-0.17-0.17-0.17
    9.85%-0.16-0.16-0.16-0.16-0.16

    Outlined: this model. Green text: above today's price of 45.08. Shading: distance from this model's own value.

    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.