DCF Studio

    VCX.AX · ASX · Real Estate

    Vicinity Centres

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    AUD 0.60

    Market price

    AUD 2.32

    Implied upside

    -74.3%

    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.
    AdjustedReported capital expenditure averages just 0.22% of revenue, which is too low to be the company's real investment - property trusts and similar structures invest through lines that are not reported as capex. Capex has been set to 1.00% 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.
    AdjustedCapital expenditure runs at 1.0% of revenue against depreciation of 0.3%. 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.

    Current EV/EBITDA of 20.3x 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
    AUD 0.60-74.3%
    Exit multiple
    AUD 2.14-7.7%
    Market price
    AUD 2.32

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (AUD). Outflows negative.

    0m296m593mFY27FY28FY29FY30FY31
    Nominal FCFFDiscounted to todayAUD
    LineFY27FY28FY29FY30FY31CAGR
    RevenueAUD 1.4bnAUD 1.4bnAUD 1.5bnAUD 1.5bnAUD 1.5bn+2.2%
    EBITAUD 813.2mAUD 831.0mAUD 849.2mAUD 867.8mAUD 886.8m+2.2%
    NOPATAUD 569.2mAUD 581.7mAUD 594.5mAUD 607.5mAUD 620.8m+2.2%
    Add depreciation & amortisationAUD 4.7mAUD 4.8mAUD 4.9mAUD 5.0mAUD 5.1m+2.2%
    Less capital expenditureAUD -13.9mAUD -14.2mAUD -14.5mAUD -14.8mAUD -15.2m+2.2%
    Less increase in working capitalAUD -16.3mAUD -16.6mAUD -17.0mAUD -17.3mAUD -17.7m+2.2%
    Free cashflow to firmAUD 543.8mAUD 555.7mAUD 567.8mAUD 580.3mAUD 593.0m+2.2%
    Discount factor0.96060.88640.81790.75470.6964-
    Present valueAUD 522.3mAUD 492.5mAUD 464.4mAUD 438.0mAUD 413.0m-5.7%
    Present Value Of The ForecastAUD 2.3bn

    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
    Beta0.856Reported 0.785, pulled toward 1.0 (Blume)
    Cost of equity10.48%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 10.9bn68.7% of capital
    Total debtAUD 5.0bn31.3% of capital, book value as a proxy
    Tax rate30.0%Effective, capped at statutory
    WACC8.37%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 0.60

    69% of EV

    Forecast FCFF, final year
    AUD 593.0m
    Capex at depreciation, working capital in reinvestment
    AUD 620.8m
    Less reinvestment at g/ROIC (29.9% of NOPAT)
    AUD -185.4m
    Capitalised
    AUD 435.4m
    ROIC (WACC floor)
    8.4%
    Terminal value, undiscounted
    AUD 7.6bn
    Terminal value, discounted
    AUD 5.3bn
    Enterprise value
    AUD 7.6bn
    Less net debt
    AUD 4.9bn
    Equity value
    AUD 2.7bn

    Exit at 20.0x EBITDA

    Value per shareAUD 2.14

    84% of EV

    Terminal value, undiscounted
    AUD 17.8bn
    Terminal value, discounted
    AUD 12.4bn
    Enterprise value
    AUD 14.8bn
    Less net debt
    AUD 4.9bn
    Equity value
    AUD 9.9bn

    Spread between methods: 113%.

    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%
    6.37%1.091.101.111.121.13
    7.37%0.800.810.820.820.83
    8.37%0.580.590.600.600.61
    9.37%0.410.420.420.430.43
    10.37%0.270.280.280.280.29

    Outlined: this model. Green text: above today's price of 2.32. 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 year2.2%21.3%+19.2pp
    Discount rate8.4%4.1%-4.3pp
    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.