Running The Numbers – Updating Nuplex ($NPX.NZ)
Valuecruncher has previously looked at Nuplex ($NPX.NZ). Subsequent to that post the company announced some very negative earnings guidance. When Valuecruncher looked at $NPX.NZ in early-November the company was trading at NZ$5.30. $NPX.NZ is currently trading at NZ$2.94 – 44.5% below NZ$5.30. Valuecruncher decided to revisit the valuation of $NPX.NZ based on their updated earnings guidance.
Nuplex ($NPX.NZ) is a New Zealand company (NZX and ASX listed) that manufactures and supplies a broad range of products to the building industry.
Valuecruncher valuation model of $NPX.NZ with interactive assumptions
Valuecruncher produces a valuation of NZ$3.71 for $NPX.NZ. This is a current valuation (an estimate of intrinsic value using a discounted cash flow model) not a target price. This valuation is 26.2% above the current share price of NZ$2.94.
Assumptions
- Revenue: For our earlier analysis we used revenues of NZ$1.625 billion in 2009, NZ$1.725 billion in 2010 and NZ$1.775 billion in 2011. We have amended those down to NZ$1.535 billion in 2009, NZ$1.575 billion in 2010 and NZ$1.650 billion in 2011.
- Profitability: We previous used a flat EBITDA margin of 7.5% to 2011. We have amended that down to 6.5% in 2009 and 2010 rising to 7.0% in 2011.
- Capital Expenditure: We have assumed capital expenditures of NZ$30.0 million per annum moving forward. This is the same as our previous valuation.
- Discount Rate: 11.0%. The PwC New Zealand cost of capital report has $NPX.NZ at a WACC of 11.2% with the wider NZ market at 9.5%. This is the same as our previous valuation.
- Terminal Growth Rate: 2.5%. previously we used a 3.0% terminal growth rate. The New Zealand economy has grown at an average rate of 2.6% over the last five-years. We have moved $NPX.NZ’s terminal growth rate closer to this wider New Zealand economy growth rate.
Our analysis incorporates the cash and debt the $NPX.NZ balance sheet – Valuecruncher calculates a net debt number.
Play with our assumptions – what does your analysis say?
Disclosure: None
Tags: NPX