Michael Hill International Limited (MHI)

Discount cash flow analysis

Within margin of safety Undervalued by 0.0%

5% margin of safety What's this?


How does this work?

This is an interactive analyst report for Michael Hill International Limited, based on a discounted cash flow valuation approach.

You can modify the assumptions and the valuation will be updated automatically. You can also save and share your valuation.

Values in $ millions
2008 2009 2010 2011 2012 2013 2014 2015

What will the revenues be in the future?

Growth beyond year three is driven by the terminal growth rate.

Sensitivity matrix

Discount Rate %

  -1% $0.89 $0.88 $0.86
Terminal Growth% 0 $0.90 $0.88 $0.87
  +1% $0.90 $0.89 $0.87

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

  • Silas316 created a new valuation of $0.70 (undervalued by 22.81%) - almost 9 years ago
  • square created a new valuation of $0.71 (undervalued by 47.92%) - almost 9 years ago
  • NZXCrunchBlog created a new valuation of $0.70 (undervalued by 40.0%) - 9 years ago
  • NZXCrunchBlog created a new valuation of $0.70 (undervalued by 40.0%) - 9 years ago
  • NZXCrunchBlog created a new valuation of $0.88 (undervalued by 31.34%) - over 9 years ago
  • KiwiEMH created a new valuation of $0.91 (undervalued by 33.82%) - over 9 years ago
  • KiwiEMH created a new valuation of $0.99 (undervalued by 11.24%) - over 9 years ago
  • KiwiEMH created a new valuation of $0.87 (undervalued by 1.16%) - almost 10 years ago


Running The Numbers - Michael Hill International ($MHI.NZ)

This valuation is part of this blog post:



Revenue: Reuters aggregates three analysts covering $MHI.NZ and the mean estimates of 2009 revenues are NZ$412.2 million. For our analysis we have used NZ$410.0 million in 2009, NZ$440.0 million in 2010 and NZ$480.0 million in 2011.

Profitability: We have used a flat EBITDA margin of 12.0% to 2011. Reuters has $MHI.NZ‘s EBITD margin at 13.5% last year and an average of 12.1% over the last five-years.

Capital Expenditure: We have assumed capital expenditures of NZ$16.0 million per annum moving forward.

Discount Rate: 10.0%. The PwC New Zealand cost of capital report has $MHI.NZ at a WACC of 7.8% with the wider NZ market at 9.5%. We believe a discount rate in the 8-10% range is appropriate. We have chosen the top of this range to reflect the more difficult current retail trading environment.

Terminal Growth Rate: 3.0%.

By NZXCrunchBlog, over 9 years ago

The boring details

All amounts in millions Figures
Enterprise Value: 0
Net Debt (Long-term borrowings less cash): 64
Equity Value: 256
Number of Shares Outstanding: 382,000,000
Calculated value per share: $0.88

Enterprise Value is the present value of the post-tax cash flows for a business into the future.

Calcuation of EV


  • 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.



  • 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.

CAPM model


  • 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.