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Safran SA
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=== '''Discounted Cashflow model (DCF)''' === ==== Key inputs ==== {| class="wikitable" !Description !Value !Commentary |- |Discount rate (%) | 8.2% |The application of the weighted average cost of capital (WACC) formula was used to compute the discount rate for future cash flows. |- |Long term growth rate (%) |1.7% |We used the growth rate of you Dividend Discount Model. |- |Corporate Tax Rate (%) |25% |According to the new French legislation, the Corporate Tax Rate should be at 25% as from 1 January 2022.<ref>https://www.economie.gouv.fr/files/files/Actus2018/dp_plf2019.pdf</ref> |} For this model, we use the WACC model to compute the discount rate for the future cash flows. {| class="wikitable" !Cost of equity |8.68% |- !Cost of debt |5.00% |- !Tax rate |25.00% |- !Debt |6,957 |- !Equity (Current market cap) |65,010 |- !D/(D+E) |10% |- !E/(D+E) |90% |- !WACC |'''8.20%''' |} ==== Safran Unlevered Free Cash Flows ==== {| class="wikitable" |- !Period (t) !2019A !2020A !2021A !2022A !2023P !2024P !2025P !2026P !2027P |- | colspan="10" | |- !EBITDA |5830 |2962 |2825 |3,498 |3,673 |3,857 |4,049 |4,252 |4,464 |- !EBIT |4,695 |1,706 |1,489 |1,958 |1,950 |1,928 |1,892 |1,838 |1,763 |- !Tax rate |26.30% |27.50% |34.40% |31.4% |25.0% |25.0% |25.0% |25.0% |25.0% |- | colspan="10" | |- !EBIT (1-t) |3,460 |1,237 |977 |1,343 |1,462 |1,446 |1,419 |1,378 |1,322 |- !D&A |1135 |1256 |1336 |1,540 |1,723 |1,928 |2,157 |2,414 |2,701 |- !NWC |2,804 |838 |(755) |2,479 |2,256 |2,053 |1,868 |1,700 |1,547 |- !Capital expenditures |(1,162) |(793) |(756) |(879) |(919) |(960) |(1,003) |(1,048) |(1,095) |- !Unlevered free cash flows (UFCF) |6,237 |2,538 |802 |4,483 |4,523 |4,467 |4,441 |4,444 |4,475 |- | colspan="10" | |- !Discount rate (r) | | | | |8.7% |8.7% |8.7% |8.7% |8.7% |- !PV of UFCFs | | | | |4,180 |3,816 |3,506 |3,242 |3,018 |- | colspan="10" | |- !Stage 1: Sum of present values |'''17,762''' | | | | | | | | |} ==== Terminal value - growth in perpetuity approach ==== {| class="wikitable" !Long term growth rate |1.7% |- !2022 FCF x (1+g) |4,551 |- !Terminal value in 2022 |69,979 |- !Stage 2: PV of TV |47,187 |- | | |- !Enterprise value (stage 1 + 2) |'''64,949''' |} ==== Terminal value - EBITDA multiple approach ==== {| class="wikitable" !EBITDA multiple |14.0x |- !Terminal value in 2022 |62,413 |- !Stage 2: PV of TV |42,085 |- | | |- !Enterprise value (stage 1 + 2) |'''59,847''' |} ==== Net debt ==== {| class="wikitable" |Data as of: |29/07/2023 |- !Net debt |'''(14)''' |} ==== Equity valuations ==== {| class="wikitable" | !Perpetuity approach !EBITDA approach |- !Equity value |'''152.32 β¬''' |'''140.35 β¬''' |} ==== Sensitivity analysis ==== {| class="wikitable" | colspan="2" rowspan="2" | ! colspan="5" |Constant Growth rate |- |''0.7%'' |''1.2%'' |'''''1.7%''''' |''2.2%'' |''2.7%'' |- ! rowspan="7" |WACC |''7.0%'' |162.61 β¬ |173.56 β¬ |186.49 β¬ |202.31 β¬ |221.70 β¬ |- |''7.4%'' |152.93 β¬ |162.42 β¬ |173.51 β¬ |186.89 β¬ |203.02 β¬ |- |''7.8%'' |144.35 β¬ |152.64 β¬ |162.22 β¬ |173.66 β¬ |187.26 β¬ |- |'''''8.2%''''' |136.68 β¬ |143.97 β¬ |'''152.32 β¬''' |162.20 β¬ |173.80 β¬ |- |''8.6%'' |129.79 β¬ |136.24 β¬ |143.58 β¬ |152.17 β¬ |162.16 β¬ |- |''9.0%'' |123.56 β¬ |129.30 β¬ |135.78 β¬ |143.32 β¬ |151.99 β¬ |- |''9.4%'' |117.90 β¬ |123.04 β¬ |128.80 β¬ |135.45 β¬ |143.04 β¬ |}
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