he company has just completed a major recapitalisation. The current share price is NZ$0.69. How is this in relation to the intrinsic value of the company’s shares?
Valuecruncher produces a valuation of NZ$0.67 for $FPA.NZ. This is a current valuation (an estimate of intrinsic value using a discounted cash flow model) not a target price. This valuation is 2.9% below the current share price of NZ$0.69.
- Revenue: Reuters aggregates seven analysts covering $FPA.NZ and this produces mean estimates of 2010 and 2011 revenues of NZ$1.355 billion and NZ$1.356 billion respectively. For our analysis we have used NZ$1.350 billion in 2010, NZ$1.350 billion in 2011 and NZ$1.375 billion in 2012.
- Profitability: We have used a flat EBITDA margin of 10.5% in 2010 then 12.0% for 2011 and beyond. Reuters has $FPA.NZ‘s EBITD margin at an average of 9.88% over the last five-years.
- Capital Expenditure: We have assumed capital expenditures of NZ$50.0 million per annum moving forward.
- Discount Rate: 8.5%. The PwC New Zealand cost of capital report has $FPA.NZ at a WACC of 7.5% with the wider NZ market at 8.3%.
- Terminal Growth Rate: 3.0%.
Our analysis incorporates the cash and debt the $FPH.NZ balance sheet – Valuecruncher calculates a net debt number.
Play with our assumptions – what does your analysis say?