Running The Numbers – Sky Television ($SKT.NZ)
Sky Network Television ($SKT.NZ) is a provider of pay and free-to-air television services in New Zealand. $SKT.NZ dominates in the New Zealand market. $SKT.NZ had 720,000 subscribers at the end of 2007 in a country of 1.45 million households. $SKT.NZ is trading toward the bottom of their 52-week range. How is this in relation to the intrinsic value of the company’s shares?
Valuecruncher valuation model of $SKT.NZ with interactive assumptions
Valuecruncher produces a valuation of NZ$5.38 for $SKT.NZ. This is a current valuation (an estimate of intrinsic value using a discounted cash flow model) not a target price. This valuation is 34.5% above the current share price of NZ$4.00.
Assumptions
- Revenue: Reuters aggregates seven analysts covering $SKT.NZ and the mean estimates of 2009 revenues are NZ$721.7 million. For our analysis we have used NZ$715.0 million in 2009, NZ$775.0 million in 2010 and NZ$835.0 million in 2011.
- Profitability: We have used a flat EBITDA margin of 40% to 2011. Reuters has $SKT.NZ‘s EBITD margin at 39.3% last year and an average of 42.4% over the last five-years.
- Capital Expenditure: We have assumed capital expenditures of NZ$115.0 million per annum moving forward.
- Discount Rate: 9.5%. The PwC New Zealand cost of capital report has $SKT.NZ at a WACC of 9.1% with the wider NZ market at 9.5%.
- Terminal Growth Rate: 4.0%.
Our analysis incorporates the cash and debt on the $SKT.NZ balance sheet – Valuecruncher calculates a net debt number.
Play with our assumptions – what does your analysis say?
Disclosure: None
Tags: SKT.NZ