New Zealand Exchange Limited (NZX)
Discount cash flow analysis
Sensitivity matrix
|
-1% |
Discount Rate % 0% |
1% |
||
|---|---|---|---|---|
| -1% | $6.83 | $6.73 | $6.64 | |
| Terminal Growth% | 0 | $6.87 | $6.77 | $6.67 |
| +1% | $6.91 | $6.81 | $6.71 |
How does a change in discount rate or terminal growth affect valuation?
This table shows the sensitivity of the valuation to two key variables - the discount rate and the terminal growth rate
Valuations and comments
- Valuecruncher created a new valuation of $0.95 (overvalued by 11.21%) - over 4 years ago
- GordonGekko created a new valuation of $2.97 (undervalued by 13.79%) - 9 years ago
- cdaynes created a new valuation of $3.13 (undervalued by 43.58%) - 11 years ago
- GordonGekko created a new valuation of $9.33 (undervalued by 13.09%) - almost 12 years ago
- GordonGekko created a new valuation of $6.40 (undervalued by 13.88%) - almost 12 years ago
- Julian created a new valuation of $4.14 (overvalued by 21.14%) - almost 12 years ago
- Julian created a new valuation of $4.01 (overvalued by 23.62%) - almost 12 years ago
- Julian created a new valuation of $4.97 (overvalued by 5.33%) - almost 12 years ago
- Julian created a new valuation of $6.87 (undervalued by 30.86%) - almost 12 years ago
- NZXCrunchBlog created a new valuation of $6.77 (undervalued by 14.75%) - over 12 years ago
- KiwiEMH created a new valuation of $6.41 (overvalued by 0.47%) - over 12 years ago
- KiwiEMH created a new valuation of $6.41 (overvalued by 0.62%) - over 12 years ago
- KiwiEMH created a new valuation of $7.58 (overvalued by 1.81%) - over 12 years ago
- andrew created a new valuation of $6.40 (overvalued by 23.35%) - almost 13 years ago
- KiwiEMH created a new valuation of $7.86 (overvalued by 0.51%) - almost 13 years ago
- tiger created a new valuation of $6.99 (overvalued by 14.96%) - almost 13 years ago
- Sam created a new valuation of $7.37 (overvalued by 10.34%) - almost 13 years ago
- Sam created a new valuation of $6.83 (overvalued by 15.26%) - almost 13 years ago
- GordonGekko created a new valuation of $8.36 (undervalued by 3.72%) - almost 13 years ago
Comments
The boring details
| All amounts in millions | Figures |
| Enterprise Value: | 13 |
| Net Debt (Long-term borrowings less cash): | -12 |
| Equity Value: | 146 |
| Number of Shares Outstanding: | 24,000,000 |
| Calculated value per share: | $6.77 |
Enterprise Value is the present value of the post-tax cash flows for a business into the future.
Where:
- C1, C2, C3 - the cash flow in period 1, 2, 3, ...
- r - the discount rate
To capture the cash flows into the future a terminal value is calculated via a perpetuity calculation -
based on the final years forecast post-tax free cash flow.
Where:
- Cn - the cash flow in the final forecast period.
- LTG - the long-term growth rate
- r - the discount rate
- g - the terminal growth rate
The Capital Asset Pricing Model (CAPM) is used to determine the equity component in the discount rate.
Where:
- rt - the risk free rate
- t - the tax rate
- B - the beta of the company
- MRP - the Market Risk Premium
Valuecruncher uses an estimate of Weighted Average Cost of Capital (WACC) to determine the discount rate in the calculation.
This valuation is part of this blog post:
http://blog.valuecruncher.com/2008/10/running-the-numbers-–nzx-limited-nzxnz/
Assumptions
In 2007 (31 December balance date) NZX.NZ had revenues of NZ$31.5 million and an EBITD margin (profits) of 49.9%. Reuters aggregates three analysts covering NZX.NZ and these have mean estimates of 2008 and 2009 revenues of NZ$32.5 and NZ$36.1 million respectively. For this analysis we have used revenues of NZ$32.5 million in 2008, NZ$36.0 million in 2009 and NZ$39.0 million in 2010. We have forecast EBITDA margins flat at 48.0% to 2010. We have estimated capital expenditure of NZ$4.0 billion in 2008 and then NZ$3.0 million moving forward. All of these assumptions can be amended in the Valuecruncher on-line valuation model to adjust the valuation.
Other Model Assumptions:
Discount Rate: 9.5%. PwC in their New Zealand cost of capital report calculates NZX.NZ WACC at 9.6%.
Terminal Growth Rate: 4.25%. The New Zealand economy has grown at an average rate of 2.6% over the last five-years. We see NZX.NZ growing more quickly than the New Zealand economy moving forward due to the growth options available to the company – primarily around data.
Our analysis incorporates the cash and debt on the NZX.NZ balance sheet – Valuecruncher calculates a net debt number.