RE: Game 2, guess EUA share price at close of business first trading day after suspension lifted14 Apr 2020 22:09
Here's how.. Again from Simply Wall street..
Below are the data sources, inputs and calculation used to determine the intrinsic value for Eurasia Mining.
AIM:EUA Discounted Cash Flow Data Sources
Data Point Source Value
Valuation Model 2 Stage Free Cash Flow to Equity
Levered Free Cash Flow Average of 1 Analyst Estimates (S&P Global) See below
Discount Rate (Cost of Equity) See below 5.8%
Perpetual Growth Rate 10-Year GB Government Bond Rate 0.5%
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 AIM:EUA
Data Point Calculation/ Source Result
Risk-Free Rate 10-Year GB Govt Bond Rate 0.5%
Equity Risk Premium S&P Global 6.1%
Metals and Mining Unlevered Beta Simply Wall St/ S&P Global 0.80
Re-levered Beta = 0.33 + [(0.66 * Unlevered beta) * (1 + (1 - tax rate) (Debt/Market Equity))]
= 0.33 + [(0.66 * 0.801) * (1 + (1 - 19.0%) (0.024%))] 0.867
Levered Beta Levered Beta limited to 0.8 to 2.0
(practical range for a stable firm) 0.867
Discount Rate/ Cost of Equity = Cost of Equity = Risk Free Rate + (Levered Beta * Equity Risk Premium)
= 0.53% + (0.867 * 6.07%) 5.79%
Discounted Cash Flow Calculation for AIM:EUA using 2 Stage Free Cash Flow to Equity Model
The calculations below outline how an intrinsic value for Eurasia Mining 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 5 years for the 1st stage, the 2nd stage assumes the company grows at a stable rate into perpetuity.
AIM:EUA DCF 1st Stage: Next 5 year cash flow forecast
Levered FCF (GBP, Millions) Source Present Value
Discounted (@ 5.79%)
2020 6.72 Analyst x1 6.35
2021 236.2 Analyst x1 211.05
2022 414.62 Est @ 75.54% 350.2
2023 634.54 Est @ 53.04% 506.61
2024 871.14 Est @ 37.29% 657.43
2025 1,099.89 Est @ 26.26% 784.63
2026 1,303.82 Est @ 18.54% 879.2
2027 1,475.11 Est @ 13.14% 940.26
2028 1,613.11 Est @ 9.36% 971.94
2029 1,721.31 Est @ 6.71% 980.37
Present value of next 5 years cash flows £6,288
AIM:EUA DCF 2nd Stage: Terminal Value
Calculation Result
Terminal Value FCF2029 × (1 + g) ÷ (Discount Rate – g)
= £1,721.313 x (1 + 0.53%) ÷ (5.79% - 0.53% ) £32,894.15
Present Value of Terminal Value = Terminal Value ÷ (1 + r)10
£32,894 ÷ (1 + 5.79%)10 £18,734.71
AIM:EUA Total Equity Value
Calculation Result
Total Equity Value = Present value of next 10 years cash flows + Terminal Value
= £6,288 + £18,735 £25,022.71
Equity Value per Share
(GBP) = Total value / Shares Outstanding
= £25,023 / 2,725 £9.18
AIM:EUA Discount to Share Price
Calculation Result
Value per share (GBP) From above. £9.18
Current discount Discount to share price of £0.072
= -1 x (£0.072 - £9.18) / £9.18 99.2%