$7.00 would appear to be an opportunistic bid... think the $205 valuation could be a tad high. I have included calc's for this valuation below.Share Price vs. Fair Value
Below are the data sources, inputs and calculation used to determine the intrinsic value for Capral.
ASX:CAA Discounted Cash Flow Data SourcesData PointSourceValueValuation Model
2 Stage Free Cash Flow to EquityLevered Free Cash FlowExtrapolated from most recent financials.See belowDiscount Rate (Cost of Equity)See below10.0%Perpetual Growth Rate5-Year Average of AU Long-Term Govt Bond Rate2.0%Calculation of Discount Rate/ Cost of Equity for ASX:CAAData PointCalculation/ SourceResultRisk-Free Rate5-Year Average of AU Long-Term Govt Bond Rate2.0%Equity Risk PremiumS&P Global5.2%Metals and Mining Unlevered BetaSimply Wall St/ S&P Global1.08Re-levered Beta= 0.33 + [(0.66 * Unlevered beta) * (1 + (1 - tax rate) (Debt/Market Equity))]
= 0.33 + [(0.66 * 1.077) * (1 + (1 - 30.0%) (95.97%))]1.536Levered BetaLevered Beta limited to 0.8 to 2.0
(practical range for a stable firm)1.536Discount Rate/ Cost of Equity= Cost of Equity = Risk Free Rate + (Levered Beta * Equity Risk Premium)
= 2.01% + (1.536 * 5.23%)10.04%Discounted Cash Flow Calculation for ASX:CAA using 2 Stage Free Cash Flow to Equity
ASX:CAA DCF 1st Stage: Next 10 years cash flow forecastASX:CAA Discount to Share Price
Levered FCF (AUD, Millions)SourcePresent Value
Discounted (@ 10.04%)202180.89Est @ 77.72%73.512022125.38Est @ 55.01%103.542023174.42Est @ 39.11%130.892024223.22Est @ 27.98%152.232025268.28Est @ 20.19%166.262026307.81Est @ 14.73%173.352027341.42Est @ 10.92%174.732028369.57Est @ 8.25%171.882029393.12Est @ 6.37%166.152030413.04Est @ 5.07%158.63Present value of next 10 years cash flowsA$1,471ASX:CAA DCF 2nd Stage: Terminal Value
CalculationResultTerminal ValueFCF2030 × (1 + g) ÷ (Discount Rate – g)
= A$413.036 x (1 + 2.01%) ÷ (10.04% - 2.01% )A$5,245.57Present Value of Terminal Value= Terminal Value ÷ (1 + r)10
A$5,246 ÷ (1 + 10.04%)10A$2,014.64ASX:CAA Total Equity Value
CalculationResultTotal Equity Value= Present value of next 10 years cash flows + Terminal Value
= A$1,471 + A$2,015A$3,485.64Equity Value per Share
(AUD)= Total value / Shares Outstanding
= A$3,486 / 17A$205.95
CalculationResultValue per share (AUD)From above.A$205.95Current discountDiscount to share price of A$6.14
= (A$205.95 - A$6.14) / A$205.9597.0%
$7.00 would appear to be an opportunistic bid... think the $205...
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