Running The Numbers - Hallenstein Glasson Holdings ($HLG.NZ)
Hallenstein Glasson Holdings ($HLG.NZ) is a NZX-listed retailer of mens and womans clothing. $HLG.NZ is trading just above their 52-week low. How is this in relation to the intrinsic value of the company’s shares?
Valuecruncher valuation model of $HLG.NZ with interactive assumptions
Valuecruncher produces a valuation of NZ$2.51 for $HLG.NZ. This is a current valuation (an estimate of intrinsic value using a discounted cash flow model) not a target price. This valuation is 11.6% above the current share price of NZ$2.25.
Assumptions
- Revenue: Reuters aggregates six analysts covering $HLG.NZ and the mean estimate of 2009 revenues are NZ$201.6 million. For our analysis we have used NZ$180.0 million in 2009, NZ$185.0 million in 2010 and NZ$200.0 million in 2011.
- Profitability: We have used an EBITDA margin of 11.0% in 2009 rising to 12.0% in 2011. Reuters has $HLG.NZ‘s EBITD margin at 14.3% last year and an average of 16.6% over the last five-years.
- Capital Expenditure: We have assumed capital expenditures of NZ$8.0 million per annum moving forward.
- Discount Rate: 10.0%. The PwC New Zealand cost of capital report lists $HLG.NZ at 10.1% with the wider market at 9.5%. We believe a discount rate in the 9-11% range is appropriate.
- Terminal Growth Rate: 2.0%. The New Zealand economy has grown at an average rate of 2.6% over the last five-years. We see $HLG.NZ growing slightly below this level moving forward.
Our analysis incorporates the cash on the $HLG.NZ balance sheet – Valuecruncher calculates a net debt number.
Play with our assumptions – what does your analysis say? We think the assumptions underlying our analysis are pretty conservative.
Disclosure: None