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 Sources

Data Point	Source	Value
Valuation Model		2 Stage Free Cash Flow to Equity
Levered Free Cash Flow	Extrapolated from most recent financials.	See below
Discount Rate (Cost of Equity)	See below	10.0%
Perpetual Growth Rate	5-Year Average of AU Long-Term Govt Bond Rate	2.0%

An important part of a discounted cash flow is the discount rate, below we explain how it has been calculated.

Calculation of Discount Rate/ Cost of Equity for ASX:CAA

Data Point	Calculation/ Source	Result
Risk-Free Rate	5-Year Average of AU Long-Term Govt Bond Rate	2.0%
Equity Risk Premium	S&P Global	5.2%
Metals and Mining Unlevered Beta	Simply Wall St/ S&P Global	1.08
Re-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%))]	1.536
Levered Beta	Levered Beta limited to 0.8 to 2.0 (practical range for a stable firm)	1.536
Discount 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 forASX:CAAusing2 Stage Free Cash Flow to Equity

The calculations below outline how an intrinsic value for Capral is arrived at by discounting future cash flows to their present value using the 2 stage method. We use analyst's estimates of cash flows going forward 10 years for the 1st stage, the 2nd stage assumes the company grows at a stable rate into perpetuity.

ASX:CAA DCF 1st Stage: Next 10 years cash flow forecast

	Levered FCF (AUD, Millions)	Source	Present Value Discounted (@ 10.04%)
2021	80.89	Est @ 77.72%	73.51
2022	125.38	Est @ 55.01%	103.54
2023	174.42	Est @ 39.11%	130.89
2024	223.22	Est @ 27.98%	152.23
2025	268.28	Est @ 20.19%	166.26
2026	307.81	Est @ 14.73%	173.35
2027	341.42	Est @ 10.92%	174.73
2028	369.57	Est @ 8.25%	171.88
2029	393.12	Est @ 6.37%	166.15
2030	413.04	Est @ 5.07%	158.63
Present value of next 10 years cash flows			A$1,471

ASX:CAA DCF 2nd Stage: Terminal Value

	Calculation	Result
Terminal Value	FCF2030× (1 + g) ÷ (Discount Rate – g) = A$413.036 x (1 + 2.01%) ÷ (10.04% - 2.01% )	A$5,245.57
Present Value of Terminal Value	= Terminal Value ÷ (1 + r)10 A$5,246 ÷ (1 + 10.04%)10	A$2,014.64

ASX:CAA Total Equity Value

	Calculation	Result
Total Equity Value	= Present value of next 10 years cash flows + Terminal Value = A$1,471 + A$2,015	A$3,485.64
Equity Value per Share (AUD)	= Total value / Shares Outstanding = A$3,486 / 17	A$205.95

ASX:CAA Discount to Share Price

	Calculation	Result
Value per share (AUD)	From above.	A$205.95
Current discount	Discount to share price of A$6.14 = (A$205.95 - A$6.14) / A$205.95	97.0%