Running The Numbers – Lion Nathan ($LNN.AX)

p=NO”>ASX and NZX-listed producer of alcoholic beverages in both the Australian and New Zealand markets. The current share price is A$8.08 – the 52-week range has been A$9.79 to A$7.36. How is this in relation to the intrinsic value of the company’s shares?

Valuecruncher valuation model of $LNN.AX with interactive assumptions

Valuecruncher produces a valuation of A$8.71 for $LNN.AX. This is a current valuation (an estimate of intrinsic value using a discounted cash flow model) not a target price. This valuation is 7.8% above the current share price of A$8.08. All of the figures below are in Australian dollars (A$).

Assumptions

• Revenue: Reuters aggregates seven analysts covering $LNN.AX and the mean estimates of 2009 and 2010 revenues are A$2.27 billion and A$2.35 billion respectively. For our analysis we have used A$2.20 billion in 2009, A$2.25 billion in 2010 and A$2.35 billion in 2011.
• Profitability: We have used an EBITDA margin of 27.5% flat to 2011. Reuters has $LNN.AX‘s EBITD margin at 27.5% last year and an average of 26.4% over the last five-years.
• Capital Expenditure: We have assumed capital expenditures of A$235.0 million per annum moving forward.
• Discount Rate: 7.0%. The PwC New Zealand cost of capital report lists $LNN.AX at 6.8% with the wider New Zealand market at 9.1%. We have used a slightly higher figure.
• Terminal Growth Rate: 3.0%.

Our analysis incorporates the cash and debt on the $LNN.AX balance sheet – Valuecruncher calculates a net debt number.

Play with our assumptions – what does your analysis say?

Disclosure: None