DCF Studio

    TLC.AX · ASX · Consumer Cyclical

    The Lottery Corporation Limited

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    AUD 2.08

    Market price

    AUD 4.80

    Implied upside

    -56.7%

    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 2.08-56.7%
    Exit multiple
    AUD 4.14-13.7%
    Market price
    AUD 4.80

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (AUD). Outflows negative.

    0m227m454mFY27FY28FY29FY30FY31
    Nominal FCFFDiscounted to todayAUD
    LineFY27FY28FY29FY30FY31CAGR
    RevenueAUD 3.6bnAUD 3.6bnAUD 3.6bnAUD 3.6bnAUD 3.7bn+0.5%
    EBITAUD 602.3mAUD 605.5mAUD 608.7mAUD 612.0mAUD 615.3m+0.5%
    NOPATAUD 421.6mAUD 423.9mAUD 426.1mAUD 428.4mAUD 430.7m+0.5%
    Add depreciation & amortisationAUD 103.3mAUD 103.8mAUD 104.4mAUD 104.9mAUD 105.5m+0.5%
    Less capital expenditureAUD -79.0mAUD -79.4mAUD -79.9mAUD -80.3mAUD -80.7m+0.5%
    Less increase in working capitalAUD -1.8mAUD -1.9mAUD -1.9mAUD -1.9mAUD -1.9m+0.5%
    Free cashflow to firmAUD 444.0mAUD 446.4mAUD 448.8mAUD 451.2mAUD 453.6m+0.5%
    Discount factor0.96200.89020.82380.76230.7054-
    Present valueAUD 427.1mAUD 397.4mAUD 369.7mAUD 343.9mAUD 320.0m-7.0%
    Present Value Of The ForecastAUD 1.9bn

    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
    Beta0.621Reported 0.434, pulled toward 1.0 (Blume)
    Cost of equity9.07%Risk-free + beta x equity risk premium
    Cost of debt5.35%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationAUD 10.7bn81.1% of capital
    Total debtAUD 2.5bn18.9% of capital, book value as a proxy
    Tax rate30.0%Effective, capped at statutory
    WACC8.06%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 shareAUD 2.08

    72% of EV

    Forecast FCFF, final year
    AUD 453.6m
    Capex at depreciation, working capital in reinvestment
    AUD 430.7m
    Less reinvestment at g/ROIC (16.2% of NOPAT)
    AUD -69.9m
    Capitalised
    AUD 360.8m
    ROIC (reported)
    15.4%
    Terminal value, undiscounted
    AUD 6.6bn
    Terminal value, discounted
    AUD 4.7bn
    Enterprise value
    AUD 6.5bn
    Less net debt
    AUD 1.9bn
    Equity value
    AUD 4.6bn

    Exit at 18.3x EBITDA

    Value per shareAUD 4.14

    83% of EV

    Terminal value, undiscounted
    AUD 13.2bn
    Terminal value, discounted
    AUD 9.3bn
    Enterprise value
    AUD 11.1bn
    Less net debt
    AUD 1.9bn
    Equity value
    AUD 9.2bn

    Spread between methods: 66%.

    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%
    6.06%2.993.253.594.034.64
    7.06%2.332.482.672.903.18
    8.06%1.881.972.082.212.36
    9.06%1.541.601.671.741.84
    10.06%1.281.321.361.411.47

    Outlined: this model. Green text: above today's price of 4.80. 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 year0.5%17.0%+16.4pp
    EBIT margin16.9%32.7%+15.8pp
    Discount rate8.1%5.3%-2.8pp
    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.