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Task 3 - Model Answer

This document summarizes a discounted cash flow valuation of Atlas Gaming that was performed on May 21, 2019. Key highlights include: - The DCF valuation implies a value of A$1,182 million for Atlas Gaming. - Key assumptions in the DCF include a revenue growth rate of 30% in 2019 gradually slowing to 10% by 2021, an EBITDA margin of 25%, and a WACC of 9.0%. - The financial summary shows projections for revenue, EBITDA, tax, and net operating profit after tax through 2023 and the terminal value.

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Videhi Bajaj
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493 views

Task 3 - Model Answer

This document summarizes a discounted cash flow valuation of Atlas Gaming that was performed on May 21, 2019. Key highlights include: - The DCF valuation implies a value of A$1,182 million for Atlas Gaming. - Key assumptions in the DCF include a revenue growth rate of 30% in 2019 gradually slowing to 10% by 2021, an EBITDA margin of 25%, and a WACC of 9.0%. - The financial summary shows projections for revenue, EBITDA, tax, and net operating profit after tax through 2023 and the terminal value.

Uploaded by

Videhi Bajaj
Copyright
© © All Rights Reserved
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Institutional Clients Group | General Industrials & Financial Sponsors

July 2019
These materials were produced for
InsideSherpa for educational and
training purposes

Prometheus acquisition

Atlas Gaming
DCF model snapshot
Assuming a tax rate of 30%, WACC of 9.0% and a terminal growth rate of 2.5%, a valuation date of 21 May 2019 would
imply a DCF valuation of A$1,182.

Financial and valuation summary Assumptions overview

A$m, Dec y/e CY19F CY20F CY21F CY22F CY23F Terminal value ·
1 Assumed revenue growth of 30% in the first year in line with 2018, gradually
Revenue 378 435 470 508 551 1 coming down to 10% by 2021 and remaining constant for 2022 and 2023
EBITDA 94 109 117 127 138 – Growth driven primarily by mobile sales, assumed a constant growth rate
% margin 25.0% 25.0% 25.0% 25.0% 25.0% 2 of 2.5% for online sales
Less D&A (4) (4) (4) (5) (5) 3
EBIT 91 105 113 123 133
·
2 Assumed a constant EBITDA margin of 25%
Less tax on EBIT (29) (33) (36) (39) (43) 4 ·
3 D&A grown at 5% from 2019 onwards
NOPAT 62 71 77 83 90
% margin 16.3% 16.3% 16.4% 16.4% 16.4% ·
4 Assumed a tax rate of 32%
Add D&A 4 4 4 5 5 · Capex assumed to be equal to D&A
Less capex (4) (4) (4) (5) (5) 5 5
Less Δ NWC (4) (5) (5) (6) (6) 6 · NWC assumed to be in line with % of sales
6
Unlevered FCF 57 66 72 77 84
Unlevered FCF (timed) 35 66 72 77 84 1,325
Timing 0.31 1.31 2.31 3.31 4.31 4.31
Discount factor 0.97 0.89 0.82 0.75 0.69 0.69 Valuation summary (A$m)
DCF 34 59 59 58 58 914

1,182
Valuation
Discounted cash flows 268 921
Discounted TV 914
660
Enterprise value 1,182
CY18 EV / EBITDA 14.3x

DCF Transaction / trading Blended valuation


comps

Source: Company and Citi estimates.


These materials were produced for InsideSherpa for educational and training purposes
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