Auckland International Airport ($AIA.NZ) is the operator of New Zealand’s largest airport. This week the company announced that the impacts of the current global financial crisis are being felt. The current share price is trading toward the bottom of the 52-week range. How is this in relation to the intrinsic value of the company’s shares?
Valuecruncher produces a valuation of NZ$1.69 for $AIA.NZ. This is a current valuation (an estimate of intrinsic value using a discounted cash flow model) not a target price. This valuation is 7.65% below the current share price of NZ$1.83.
- Revenue: Reuters aggregates 10 analysts covering $AIA.NZ and the mean estimates of 2009 revenues are NZ$364.8 million. For our analysis we have used NZ$365.0 million in 2009, NZ$385.0 million in 2010 and NZ$415.0 million in 2011.
- Profitability: We have used a flat EBITDA margin of 75% to 2011. Reuters has $AIA.NZ‘s EBITD margin at 78.6% last year and an average of 77.7% over the last five-years.
- Capital Expenditure: We have assumed capital expenditures of NZ$85.0 million to 2011 then NZ$75.0 million per annum moving forward.
- Discount Rate: 10.0%. The PwC New Zealand cost of capital report has $AIA.NZ at a WACC of 10.3% with the wider NZ market at 9.5%.
- Terminal Growth Rate: 4.25%.
Our analysis incorporates the cash and debt the $AIA.NZ balance sheet – Valuecruncher calculates a net debt number.
Play with our assumptions – what does your analysis say?