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    VHP.NZ · NZE · Real Estate

    Vital Healthcare Property Trust

    Also onConsensus Drift

    Implied value per share

    NZD 0.67

    Market price

    NZD 1.92

    Implied upside

    -64.9%

    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 0.00% 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 0.0%. 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.
    NoteRisk-free rate is an assumption: NZD assumption - no free live source available for this market.

    Current EV/EBITDA of 20.7x 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 0.67-64.9%
    Exit multiple
    NZD 1.93+0.7%
    Market price
    NZD 1.92

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (NZD). Outflows negative.

    0m61m121mFY27FY28FY29FY30FY31
    Nominal FCFFDiscounted to todayNZD
    LineFY27FY28FY29FY30FY31CAGR
    RevenueNZD 202.6mNZD 211.3mNZD 220.3mNZD 229.7mNZD 239.6m+4.3%
    EBITNZD 139.1mNZD 145.1mNZD 151.3mNZD 157.7mNZD 164.5m+4.3%
    NOPATNZD 100.2mNZD 104.4mNZD 108.9mNZD 113.6mNZD 118.4m+4.3%
    Add depreciation & amortisationNZD 0.00NZD 0.00NZD 0.00NZD 0.00NZD 0.00-
    Less capital expenditureNZD -2.0mNZD -2.1mNZD -2.2mNZD -2.3mNZD -2.4m+4.3%
    Less increase in working capitalNZD 4.4mNZD 4.6mNZD 4.8mNZD 5.0mNZD 5.2m-4.3%
    Free cashflow to firmNZD 102.5mNZD 106.9mNZD 111.5mNZD 116.3mNZD 121.2m+4.3%
    Discount factor0.97030.91360.86020.80990.7626-
    Present valueNZD 99.5mNZD 97.7mNZD 95.9mNZD 94.2mNZD 92.4m-1.8%
    Present Value Of The ForecastNZD 479.6m

    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
    Beta0.688Reported 0.534, pulled toward 1.0 (Blume)
    Cost of equity8.97%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 1.5bn51.8% of capital
    Total debtNZD 1.4bn48.2% of capital, book value as a proxy
    Tax rate28.0%Effective, capped at statutory
    WACC6.21%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 0.67

    76% of EV

    Forecast FCFF, final year
    NZD 121.2m
    Capex at depreciation, working capital in reinvestment
    NZD 118.4m
    Less reinvestment at g/ROIC (40.3% of NOPAT)
    NZD -47.7m
    Capitalised
    NZD 70.8m
    ROIC (WACC floor)
    6.2%
    Terminal value, undiscounted
    NZD 2.0bn
    Terminal value, discounted
    NZD 1.5bn
    Enterprise value
    NZD 2.0bn
    Less net debt
    NZD 1.4bn
    Equity value
    NZD 543.2m

    Exit at 20.0x EBITDA

    Value per shareNZD 1.93

    84% of EV

    Terminal value, undiscounted
    NZD 3.3bn
    Terminal value, discounted
    NZD 2.5bn
    Enterprise value
    NZD 3.0bn
    Less net debt
    NZD 1.4bn
    Equity value
    NZD 1.6bn

    Spread between methods: 97%.

    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%
    4.21%1.791.811.821.841.85
    5.21%1.121.131.141.151.16
    6.21%0.650.660.670.680.69
    7.21%0.320.330.340.350.35
    8.21%0.070.080.080.090.10

    Outlined: this model. Green text: above today's price of 1.92. 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 year4.3%13.7%+9.4pp
    Discount rate6.2%4.1%-2.1pp
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    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.