current share price is NZ$0.68 which is just above the 52-week low of NZ$0.60 (the 52-week high was NZ$2.00). How is this in relation to the intrinsic value of the company’s shares?
Valuecruncher produces a valuation of NZ$0.69 for $THL.NZ. This is a current valuation (an estimate of intrinsic value using a discounted cash flow model) not a target price. This valuation is 1.5% above the current share price of NZ$0.68.
- Revenue: Reuters aggregates six analysts covering $THL.NZ and the mean estimates of 2009 and 2010 revenues are NZ$143.2 million and NZ$148.5 million respectively. For our analysis we have used NZ$145.0 million in 2009, NZ$150.0 million in 2010 and NZ$175.0 million in 2011.
- Profitability: We have used an EBITDA margin of 33.0% in 2009 and 2010 rising to 34% in 2011. Reuters has $THL.NZ‘s EBITD margin at 33.3% last year and an average of 34.8% over the last five-years.
- Capital Expenditure: We have assumed capital expenditures of NZ$40.0 million per annum moving forward.
- Discount Rate: 11.0%. The PwC New Zealand cost of capital report lists $THL.NZ at 11.0% with the wider market at 9.1%.
- Terminal Growth Rate: 2.5%. The New Zealand economy has grown at an average rate of 2.6% over the last five-years. Our assumption is $THL.NZ growing broadly in line with this.
Our analysis incorporates the cash and debt on the $THL.NZ balance sheet – Valuecruncher calculates a net debt number.
Play with our assumptions – what does your analysis say?