PPL.NZ has had tough ride over the last year. The share price has dropped from NZ$3.08 to as low as NZ$1.05. Currently PPL is trading at NZ$1.12. We thought it was time to put some numbers around PPL.NZ.

Valuecruncher valuation model of PPL.NZ with interactive assumptions

Valuecruncher produces a valuation of NZ$1.11 for PPL.NZ. This is a current valuation (an estimate of intrinsic value using a discounted cash flow model) not a target price. This valuation is right at the current share price of NZ$1.12.

Assumptions

• Revenue: Reuters aggregates seven analysts covering PPL.NZ and these analysts have mean estimates of 2009 revenues of NZ$441 million. For our analysis we have used NZ$425 million in 2009, NZ$450 million in 2010 and NZ$485 million in 2011.

• Profitability: We have used an EBITDA margin of 12% in 2009 rising to 13% in 2011. Reuters has PPL.NZ‘s EBITD margin at 10.91% last year with a five-year average of 14.76%.

• Capital Expenditure: We have assumed capital expenditures of NZ$18 million in 2009 rising to NZ$35 million in 2011 and then NZ$30 million beyond that.

• Discount Rate: 11.0%. The PwC New Zealand cost of capital report has PPL.NZ at a WACC of 13.5% with the wider NZ market at 9.5%. We feel that 13.5% is too high.

• Terminal Growth Rate: 4.5%.

Our analysis incorporates the cash and debt the PPL.NZ balance sheet – Valuecruncher calculates a net debt number.

Disclosure: None

Tags: NZX, PPL

This entry was posted on Tuesday, October 21st, 2008 at 6:23 am and is filed under NZX, Pumpkin Patch. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.