Running The Numbers –NZX Limited (NZX.NZ)
New Zealand’s sharemarket operator NZX Limited (NZX.NZ) closed today at NZ$6.00 – just above the 52-week low of NZ$5.83. We decided to have a look at NZX.NZ with the Valuecruncher interactive tool to place an estimate on the intrinsic value of the company using a discounted cash flow valuation.
Valuecruncher valuation model of NZX.NZ with interactive assumptions
Valuecruncher produces a valuation of NZ$6.77 for NZX.NZ. This is a current valuation (an estimate of intrinsic value) not a target price. This valuation is 12.8% above the current share price of NZ$6.00.
Assumptions
In 2007 (31 December balance date) NZX.NZ had revenues of NZ$31.5 million and an EBITD margin (profits) of 49.9%. Reuters aggregates three analysts covering NZX.NZ and these have mean estimates of 2008 and 2009 revenues of NZ$32.5 and NZ$36.1 million respectively. For this analysis we have used revenues of NZ$32.5 million in 2008, NZ$36.0 million in 2009 and NZ$39.0 million in 2010. We have forecast EBITDA margins flat at 48.0% to 2010. We have estimated capital expenditure of NZ$4.0 million in 2008 and then NZ$3.0 million moving forward. All of these assumptions can be amended in the Valuecruncher on-line valuation model to adjust the valuation.
Other Model Assumptions:
Discount Rate: 9.5%. PwC in their New Zealand cost of capital report calculates NZX.NZ WACC at 9.6%.
Terminal Growth Rate: 4.25%. The New Zealand economy has grown at an average rate of 2.6% over the last five-years. We see NZX.NZ growing more quickly than the New Zealand economy moving forward due to the growth options available to the company – primarily around data.
Our analysis incorporates the cash and debt on the NZX.NZ balance sheet – Valuecruncher calculates a net debt number.
Based on our analysis and assumptions the current share price looks a slight discount to intrinsic value. Play with our assumptions – what does your analysis say?
Disclosure: None
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Tags: NZX, NZX Limited