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I'm in. Done research and TIM is undervalued

Timbercorp Limited (TIM) Valuecruncher

BuyUndervalued by20.0%

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

EBITDA Margin (%)
2008 2009 2010 2011

EBITDA is Earnings Before Interest, Tax, Depreciation and Amortisation.

Values in $ millions
2008 2009 2010 2011 Terminal

Capital investment beyond year three is driven by the terminal figure.

Capital Expenditure is the cash that the company actually spends and Depreciation is the accounting treatment

Figures (millions)
Enterprise value: 720
Equity value: 35
Net debt: 684
Value of equity: 35
Shares outstanding: 352,000,000
Valuation updated: 02 Apr 2009
Valuation views: 0
Valuation Assumptions What are these?


Comparison analysis
Timbercorp Limited
TIM Viterra Inc.
VT ABB Grain Limited
ABB
All amounts in millions
Values from last financial year
Market capitalisation: 35 2,081 1,005
Net Debt (LT Borrowings - Cash) 684 -41 227
Enterprise Value (EV) 720 2,040 1,233
Revenue (Last Financial year - LFY) 494 6,777 2,238
EBITDA (LFY) 158 524 152
Percent 32.0 % 7.7 % 6.8 %
EBIT 142 422 121
Percent 28.9 % 6.2 % 5.4 %

EV/Revenue 1.46 0.3 0.55
EV/EBITDA 4.55 3.89 8.07
EV/EBIT 5.05 4.83 10.17

Sensitivity matrix

-1% Discount Rate %
0%
1%
-1% $0.12 $0.12 $0.12
Terminal Growth% 0 $0.12 $0.12 $0.12
+1% $0.12 $0.12 $0.12
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 $0.12 (undervalued by 20.0%) - 3 hours ago
GordonGekko created a new valuation of $0.12 (overvalued by 7.69%) - 1 month ago

Comments
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The boring details
All amounts in millions Figures
Enterprise Value: 720
Net Debt (Long-term borrowings less cash): 684
Equity Value: 35
Number of Shares Outstanding: 352,000,000
Calculated value per share: $0.12

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


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

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.