SKY Network Television Limited (SKT)

Discount cash flow analysis

Sell Overvalued by 12.5%

5% margin of safety What's this?

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How does this work?

This is an interactive analyst report for SKY Network Television 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.

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Values in $ millions
2007 2008 2009 2010 2011 2012 2013 2014
 
                 
               
 

What will the revenues be in the future?

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

Sensitivity matrix

   
-1% 		Discount Rate %
0%
1%
  -1% $4.61 $4.52 $4.43
Terminal Growth% 0 $4.64 $4.55 $4.46
  +1% $4.68 $4.58 $4.49

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 $3.99 (overvalued by 23.27%) - 16 hours ago
  • GordonGekko created a new valuation of $5.14 (undervalued by 18.16%) - over 2 years ago
  • Lespe959 created a new valuation of $5.11 (undervalued by 15.61%) - over 3 years ago
  • gordonsk created a new valuation of $5.08 (undervalued by 30.26%) - over 3 years ago
  • GordonGekko created a new valuation of $5.06 (undervalued by 32.81%) - over 3 years ago
  • NZXCrunchBlog created a new valuation of $5.38 (undervalued by 31.22%) - over 3 years ago
  • KiwiEMH created a new valuation of $4.76 (overvalued by 1.86%) - over 3 years ago
  • GordonGekko created a new valuation of $4.55 (overvalued by 1.09%) - over 4 years ago

Comments

WACC and LTG

WACC of 10.5% per PwC Cost of Capital Report. Long-term growth at 4%.

By GordonGekko, over 4 years ago

The boring details

All amounts in millions Figures
Enterprise Value: 2,538
Net Debt (Long-term borrowings less cash): 514
Equity Value: 1,790
Number of Shares Outstanding: 389,000,000
Calculated value per share: $4.55

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

Calcuation of EV

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.

Perpetuity

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.

CAPM model

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.