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Else Nutrition
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=== Valuation: DCF base case valuation of C$6.0/share === Edison values Else primarily on a DCF basis, as it effectively captures the potential growth of the business and can be flexed for different scenarios. Edison uses a 10-year standard DCF followed by a further 10-year ‘fade' or stabilisation period, before applying its terminal assumptions. Edison's model assumes a sales CAGR of 47% in years 4 to 10, followed by 15% in years 11–15 and 10% in years 16–20. Edison assumes 2.0% terminal growth and a 15% terminal EBIT margin. This results in a 12-month DCF value of C$6.0, which Edison flexes to C$10.4 under a bull case scenario. The current share price appears to be discounting significantly more bearish conditions than its slower roll-out scenario, discounting terminal growth of 0% and a WACC of 23%. Edison also looks at peer group analysis; although there are not many directly comparable peers, Else trades on an FY22 EV/sales of 6.6x versus a peer group of much more mature baby food and plant-based manufacturers on 3.0x. Edison expects Else’s growth to significantly outpace that of its peers, and hence believe Else’s current premium is justified.
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