DCF Studio

    SUM.NZ · NZE · Healthcare

    Summerset Group Holdings Limited

    Also onConsensus Drift

    Implied value per share

    NZD -9.24

    Market price

    NZD 7.60

    Implied upside

    -221.6%

    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.
    AdjustedFree cashflow is negative in at least one forecast year, so terminal value carries most of the valuation.
    AdjustedCapital expenditure runs at 33.0% of revenue against depreciation of 6.2%. 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.
    NoteRisk-free rate is an assumption: NZD assumption - no free live source available for this market.

    Current EV/EBITDA of 118.6x sits outside a defensible 3-20x band, so the exit multiple is capped at 20.0x. A multiple that far out usually means EBITDA is the wrong denominator for this business.

    Value Per Share

    Perpetuity growth
    NZD -9.24-221.6%
    Exit multiple
    NZD -6.05-179.6%
    Market price
    NZD 7.60

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (NZD). Outflows negative.

    -174122949-870614750FY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayNZD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueNZD 415.2mNZD 477.7mNZD 549.5mNZD 632.2mNZD 727.4m+15.0%
    EBITNZD 14.4mNZD 16.5mNZD 19.0mNZD 21.9mNZD 25.1m+15.0%
    NOPATNZD 13.7mNZD 15.8mNZD 18.1mNZD 20.9mNZD 24.0m+15.0%
    Add depreciation & amortisationNZD 25.8mNZD 29.7mNZD 34.2mNZD 39.3mNZD 45.2m+15.0%
    Less capital expenditureNZD -136.9mNZD -157.6mNZD -181.3mNZD -208.5mNZD -239.9m+15.0%
    Less increase in working capitalNZD -2.0mNZD -2.3mNZD -2.6mNZD -3.0mNZD -3.4m+15.0%
    Free cashflow to firmNZD -99.4mNZD -114.3mNZD -131.5mNZD -151.3mNZD -174.1m-15.0%
    Discount factor0.97100.91560.86330.81400.7675-
    Present valueNZD -96.5mNZD -104.7mNZD -113.6mNZD -123.2mNZD -133.6m-8.5%
    Present Value Of The ForecastNZD -571.6m

    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
    Beta0.528Reported 0.295, pulled toward 1.0 (Blume)
    Cost of equity7.93%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 1.9bn48.4% of capital
    Total debtNZD 2.0bn51.6% of capital, book value as a proxy
    Tax rate4.5%Effective, capped at statutory
    WACC6.06%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 -9.24

    -120% of EV

    Forecast FCFF, final year
    NZD -174.1m
    Capex at depreciation, working capital in reinvestment
    NZD 24.0m
    Less reinvestment at g/ROIC (41.3% of NOPAT)
    NZD -9.9m
    Capitalised
    NZD 14.1m
    ROIC (WACC floor)
    6.1%
    Terminal value, undiscounted
    NZD 406.6m
    Terminal value, discounted
    NZD 312.0m
    Enterprise value
    NZD -259.6m
    Less net debt
    NZD 2.0bn
    Equity value
    NZD -2.2bn

    Exit at 20.0x EBITDA

    Value per shareNZD -6.05

    212% of EV

    Terminal value, undiscounted
    NZD 1.4bn
    Terminal value, discounted
    NZD 1.1bn
    Enterprise value
    NZD 508.5m
    Less net debt
    NZD 2.0bn
    Equity value
    NZD -1.5bn

    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%
    4.06%-8.57-8.56-8.55-8.54-8.53
    5.06%-8.99-8.99-8.98-8.97-8.96
    6.06%-9.25-9.25-9.24-9.24-9.23
    7.06%-9.42-9.42-9.41-9.41-9.40
    8.06%-9.54-9.53-9.53-9.52-9.52

    Outlined: this model. Green text: above today's price of 7.60. 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 margin3.5%39.3%+35.9pp
    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.