id=62″>the sale of the TZ1 registry business. A good financial result. Three separate acquisitions. And finally details of a capital raise to fund the acquisitions. $NZX.NZ is trading at NZ$8.30. This is just below the 52-week high for $NZX.NZ of NZ$8.40. We decided to have a look at the current share price in relation to the intrinsic value of the company’s shares?
Valuecruncher produces a valuation of NZ$9.33 for $NZX.NZ. This is a current valuation (an estimate of intrinsic value using a discounted cash flow model) not a target price. This valuation is 12.4% above the current share price of NZ$8.30.
- Revenue: Reuters aggregates four analysts covering $NZX.NZ and these produce mean estimates of 2009 and 2010 revenues of NZ$36.3 million and NZ$42.6 million respectively. For our analysis we have used NZ$36.0 million in 2009, NZ$42.0 million in 2010 and NZ$46.0 million in 2011.
- Profitability: We have used an EBITDA margin of 52.0% in 2009 dropping to 50.0% in 2010 and beyond. Reuters has $NZX.NZ‘s EBITD margin at 51.8% last year and an average of 42.3% over the last five-years.
- Capital Expenditure: We have assumed capital expenditures of NZ$2.0 million per annum moving forward.
- Discount Rate: 10.5%. The PwC New Zealand cost of capital report has $NZX.NZ at a WACC of 11.1% with the wider NZ market at 8.3%.
- Terminal Growth Rate: 3.8%. We have assumed our 9.5% growth between 2010 and 2011 gradually decreases to a stable long-term growth rate of 3%.
Our analysis incorporates the cash on the $NZX.NZ balance sheet – Valuecruncher calculates a net debt number.
Play with our assumptions – what does your analysis say?