Latest news with #Ventia
Yahoo
18-05-2025
- Business
- Yahoo
Ventia Services Group Limited (ASX:VNT) Shares Could Be 48% Below Their Intrinsic Value Estimate
Using the 2 Stage Free Cash Flow to Equity, Ventia Services Group fair value estimate is AU$8.91 Ventia Services Group's AU$4.65 share price signals that it might be 48% undervalued Our fair value estimate is 96% higher than Ventia Services Group's analyst price target of AU$4.54 How far off is Ventia Services Group Limited (ASX:VNT) from its intrinsic value? Using the most recent financial data, we'll take a look at whether the stock is fairly priced by taking the expected future cash flows and discounting them to their present value. One way to achieve this is by employing the Discounted Cash Flow (DCF) model. It may sound complicated, but actually it is quite simple! We generally believe that a company's value is the present value of all of the cash it will generate in the future. However, a DCF is just one valuation metric among many, and it is not without flaws. If you still have some burning questions about this type of valuation, take a look at the Simply Wall St analysis model. We've discovered 1 warning sign about Ventia Services Group. View them for free. We're using the 2-stage growth model, which simply means we take in account two stages of company's growth. In the initial period the company may have a higher growth rate and the second stage is usually assumed to have a stable growth rate. To start off with, we need to estimate the next ten years of cash flows. Where possible we use analyst estimates, but when these aren't available we extrapolate the previous free cash flow (FCF) from the last estimate or reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. We do this to reflect that growth tends to slow more in the early years than it does in later years. A DCF is all about the idea that a dollar in the future is less valuable than a dollar today, so we need to discount the sum of these future cash flows to arrive at a present value estimate: 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 Levered FCF (A$, Millions) AU$320.8m AU$326.7m AU$355.6m AU$379.8m AU$398.8m AU$416.0m AU$432.0m AU$447.1m AU$461.8m AU$476.2m Growth Rate Estimate Source Analyst x4 Analyst x4 Analyst x4 Analyst x2 Est @ 4.99% Est @ 4.31% Est @ 3.84% Est @ 3.51% Est @ 3.28% Est @ 3.12% Present Value (A$, Millions) Discounted @ 7.6% AU$298 AU$282 AU$285 AU$283 AU$276 AU$268 AU$258 AU$248 AU$238 AU$228 ("Est" = FCF growth rate estimated by Simply Wall St)Present Value of 10-year Cash Flow (PVCF) = AU$2.7b After calculating the present value of future cash flows in the initial 10-year period, we need to calculate the Terminal Value, which accounts for all future cash flows beyond the first stage. For a number of reasons a very conservative growth rate is used that cannot exceed that of a country's GDP growth. In this case we have used the 5-year average of the 10-year government bond yield (2.7%) to estimate future growth. In the same way as with the 10-year 'growth' period, we discount future cash flows to today's value, using a cost of equity of 7.6%. Terminal Value (TV)= FCF2034 × (1 + g) ÷ (r – g) = AU$476m× (1 + 2.7%) ÷ (7.6%– 2.7%) = AU$10b Present Value of Terminal Value (PVTV)= TV / (1 + r)10= AU$10b÷ ( 1 + 7.6%)10= AU$4.8b The total value is the sum of cash flows for the next ten years plus the discounted terminal value, which results in the Total Equity Value, which in this case is AU$7.5b. The last step is to then divide the equity value by the number of shares outstanding. Relative to the current share price of AU$4.7, the company appears quite good value at a 48% discount to where the stock price trades currently. The assumptions in any calculation have a big impact on the valuation, so it is better to view this as a rough estimate, not precise down to the last cent. We would point out that the most important inputs to a discounted cash flow are the discount rate and of course the actual cash flows. If you don't agree with these result, have a go at the calculation yourself and play with the assumptions. The DCF also does not consider the possible cyclicality of an industry, or a company's future capital requirements, so it does not give a full picture of a company's potential performance. Given that we are looking at Ventia Services Group as potential shareholders, the cost of equity is used as the discount rate, rather than the cost of capital (or weighted average cost of capital, WACC) which accounts for debt. In this calculation we've used 7.6%, which is based on a levered beta of 1.127. Beta is a measure of a stock's volatility, compared to the market as a whole. We get our beta from the industry average beta of globally comparable companies, with an imposed limit between 0.8 and 2.0, which is a reasonable range for a stable business. Check out our latest analysis for Ventia Services Group Strength Debt is well covered by earnings and cashflows. Dividends are covered by earnings and cash flows. Weakness Earnings growth over the past year underperformed the Construction industry. Dividend is low compared to the top 25% of dividend payers in the Construction market. Opportunity Annual earnings are forecast to grow for the next 3 years. Trading below our estimate of fair value by more than 20%. Threat Annual earnings are forecast to grow slower than the Australian market. Whilst important, the DCF calculation shouldn't be the only metric you look at when researching a company. The DCF model is not a perfect stock valuation tool. Instead the best use for a DCF model is to test certain assumptions and theories to see if they would lead to the company being undervalued or overvalued. For instance, if the terminal value growth rate is adjusted slightly, it can dramatically alter the overall result. What is the reason for the share price sitting below the intrinsic value? For Ventia Services Group, we've compiled three further elements you should assess: Risks: Be aware that Ventia Services Group is showing 1 warning sign in our investment analysis , you should know about... Future Earnings: How does VNT's growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with our free analyst growth expectation chart. Other High Quality Alternatives: Do you like a good all-rounder? Explore our interactive list of high quality stocks to get an idea of what else is out there you may be missing! PS. The Simply Wall St app conducts a discounted cash flow valuation for every stock on the ASX every day. If you want to find the calculation for other stocks just search here. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. 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Yahoo
17-05-2025
- Business
- Yahoo
Ventia Services Group Limited (ASX:VNT) Shares Could Be 48% Below Their Intrinsic Value Estimate
Using the 2 Stage Free Cash Flow to Equity, Ventia Services Group fair value estimate is AU$8.91 Ventia Services Group's AU$4.65 share price signals that it might be 48% undervalued Our fair value estimate is 96% higher than Ventia Services Group's analyst price target of AU$4.54 How far off is Ventia Services Group Limited (ASX:VNT) from its intrinsic value? Using the most recent financial data, we'll take a look at whether the stock is fairly priced by taking the expected future cash flows and discounting them to their present value. One way to achieve this is by employing the Discounted Cash Flow (DCF) model. It may sound complicated, but actually it is quite simple! We generally believe that a company's value is the present value of all of the cash it will generate in the future. However, a DCF is just one valuation metric among many, and it is not without flaws. If you still have some burning questions about this type of valuation, take a look at the Simply Wall St analysis model. We've discovered 1 warning sign about Ventia Services Group. View them for free. We're using the 2-stage growth model, which simply means we take in account two stages of company's growth. In the initial period the company may have a higher growth rate and the second stage is usually assumed to have a stable growth rate. To start off with, we need to estimate the next ten years of cash flows. Where possible we use analyst estimates, but when these aren't available we extrapolate the previous free cash flow (FCF) from the last estimate or reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. We do this to reflect that growth tends to slow more in the early years than it does in later years. A DCF is all about the idea that a dollar in the future is less valuable than a dollar today, so we need to discount the sum of these future cash flows to arrive at a present value estimate: 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 Levered FCF (A$, Millions) AU$320.8m AU$326.7m AU$355.6m AU$379.8m AU$398.8m AU$416.0m AU$432.0m AU$447.1m AU$461.8m AU$476.2m Growth Rate Estimate Source Analyst x4 Analyst x4 Analyst x4 Analyst x2 Est @ 4.99% Est @ 4.31% Est @ 3.84% Est @ 3.51% Est @ 3.28% Est @ 3.12% Present Value (A$, Millions) Discounted @ 7.6% AU$298 AU$282 AU$285 AU$283 AU$276 AU$268 AU$258 AU$248 AU$238 AU$228 ("Est" = FCF growth rate estimated by Simply Wall St)Present Value of 10-year Cash Flow (PVCF) = AU$2.7b After calculating the present value of future cash flows in the initial 10-year period, we need to calculate the Terminal Value, which accounts for all future cash flows beyond the first stage. For a number of reasons a very conservative growth rate is used that cannot exceed that of a country's GDP growth. In this case we have used the 5-year average of the 10-year government bond yield (2.7%) to estimate future growth. In the same way as with the 10-year 'growth' period, we discount future cash flows to today's value, using a cost of equity of 7.6%. Terminal Value (TV)= FCF2034 × (1 + g) ÷ (r – g) = AU$476m× (1 + 2.7%) ÷ (7.6%– 2.7%) = AU$10b Present Value of Terminal Value (PVTV)= TV / (1 + r)10= AU$10b÷ ( 1 + 7.6%)10= AU$4.8b The total value is the sum of cash flows for the next ten years plus the discounted terminal value, which results in the Total Equity Value, which in this case is AU$7.5b. The last step is to then divide the equity value by the number of shares outstanding. Relative to the current share price of AU$4.7, the company appears quite good value at a 48% discount to where the stock price trades currently. The assumptions in any calculation have a big impact on the valuation, so it is better to view this as a rough estimate, not precise down to the last cent. We would point out that the most important inputs to a discounted cash flow are the discount rate and of course the actual cash flows. If you don't agree with these result, have a go at the calculation yourself and play with the assumptions. The DCF also does not consider the possible cyclicality of an industry, or a company's future capital requirements, so it does not give a full picture of a company's potential performance. Given that we are looking at Ventia Services Group as potential shareholders, the cost of equity is used as the discount rate, rather than the cost of capital (or weighted average cost of capital, WACC) which accounts for debt. In this calculation we've used 7.6%, which is based on a levered beta of 1.127. Beta is a measure of a stock's volatility, compared to the market as a whole. We get our beta from the industry average beta of globally comparable companies, with an imposed limit between 0.8 and 2.0, which is a reasonable range for a stable business. Check out our latest analysis for Ventia Services Group Strength Debt is well covered by earnings and cashflows. Dividends are covered by earnings and cash flows. Weakness Earnings growth over the past year underperformed the Construction industry. Dividend is low compared to the top 25% of dividend payers in the Construction market. Opportunity Annual earnings are forecast to grow for the next 3 years. Trading below our estimate of fair value by more than 20%. Threat Annual earnings are forecast to grow slower than the Australian market. Whilst important, the DCF calculation shouldn't be the only metric you look at when researching a company. The DCF model is not a perfect stock valuation tool. Instead the best use for a DCF model is to test certain assumptions and theories to see if they would lead to the company being undervalued or overvalued. For instance, if the terminal value growth rate is adjusted slightly, it can dramatically alter the overall result. What is the reason for the share price sitting below the intrinsic value? For Ventia Services Group, we've compiled three further elements you should assess: Risks: Be aware that Ventia Services Group is showing 1 warning sign in our investment analysis , you should know about... Future Earnings: How does VNT's growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with our free analyst growth expectation chart. Other High Quality Alternatives: Do you like a good all-rounder? Explore our interactive list of high quality stocks to get an idea of what else is out there you may be missing! PS. The Simply Wall St app conducts a discounted cash flow valuation for every stock on the ASX every day. If you want to find the calculation for other stocks just search here. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
The Australian
15-05-2025
- Business
- The Australian
Ventia and Spotless deny ACCC price fixing suit; inside the court documents
'Good we have 12 per cent now,' the BGIS staffer allegedly texted. His counterpart at Spotless allegedly replied: 'Same.' These text messages detailed in a court document filed by the Australian Competition and Consumer Commission go to the heart of a cartel case brought by the regulator and defended by Spotless, which is owned by ASX-listed Downer, and its co-accused Ventia. The Department of Defence contractors are alleged to have conspired to push up their prices, which they deny, for everyday services like laundry, catering and pest control. For the first time, the substance of their defence can be reported. The ACCC statement of claim lodged on Christmas Eve also makes allegations about another operator, BGIS's role, in the alleged attempt to increase fees between April 2019 and August 2022. But BGIS, which was sold by Brookfield in 2019 for $1bn to CCMP Capital Advisors, is not a party to the case, and not listed as a respondent. The competition cop alleged between April 30-May 1, 2019, Spotless made an arrangement with BGIS to tell Defence it would apply a mark-up of 10 per cent on the value of estate management and operation services. Spotless expressly denies this, according to its defence. Spotless and Ventia are currently delivering so-called EMOS (estate maintenance and operations services) contracts to Defence worth about $4bn and $5.8bn respectively, across more than 200 Australian Defence Force bases and other properties, according to the ACCC. Defence told contractors it intended to allocate at least $15m in funds to the 'EMOS providers' for particular works to be delivered before the end of the 2018-19 financial year, according to the statement of claim. The providers were not entitled to more than a 10 per cent mark up on the value of work, it further alleged. Defence executive Shane Brassington emailed a number of contractors on April 30, 2019 and said: 'opportunity funding is for estate improvement and not designed to give EMOS a commercial windfall come EOFY'. It is then alleged that BGIS executive Bradley Robbins texted Spotless executive Jeffrey Collins the same day beginning the following exchange: 'Mate did you see the email from DEPU, we shouldnt [sic] be doing works for no costs'. Mr Collins: 'We are holding the line.' 'Same so you charge standard 10 per cent Project fee yes'. 'yep'. The 64-page statement of claim concludes the text chat with the alleged last word from Mr Robbins: 'Good its [sic] a bit rich isn't it'. As well, the ACCC claimed by May 4, 2020, Spotless and Ventia 'made an arrangement or arrived at an understanding with each other and BGIS' they would each offer Defence supply of a 'large' volume of work on estates to be completed under a Covid-19 economic stimulus plan. 'In or around late April and early May 2020, representatives of the EMOS Providers had telephone conversations in which they discussed seeking, and understood each EMOS Provider would seek, a greater than 10 per cent mark-up from Defence,' the ACCC pleading alleged. It went on to identify a number of discussions that allegedly took place between Mr Collins, Mr Robbins and Ventia executive Gavin Campbell. The ACCC alleged that after Defence rejected an offer from Spotless executive Jacob Bonisch for a 'mark-up of 12.75 per cent on project value', Ventia wrote to Defence about the same job and offered a 10 per cent mark up. Ultimately, all three providers were offered a mark-up of 12 per cent. The ACCC claimed that between 3.23pm and 3.37pm on the afternoon of May 12, 2020, Mr Robbins texted Mr Collins and said: 'Good we have 12 per cent now'. Mr Collins allegedly replied: 'same'. Spotless and Ventia deny making an arrangement or arriving at an understanding with Ventia and BGIS 'that they would each offer to Defence to supply the STIM20 Works at a greater than 10 per cent mark-up'. Around May 13, 2022, Defence requested contractors start to deliver energy savings. The regulator claimed the contractors 'collaborated about a proposal to Defence to deliver a national energy program involving energy saving initiatives such as the installation of LED lighting, heat pumps, variable speed drives and smart meters'. The estimated program cost for the energy saving works was about $291m, comprising $117.7m for Ventia, $130.4m for Spotless and $43m for BGIS. During a meeting on August 23, 2022, the ACCC alleged Ventia executive Lena Parker said to Mr Collins and BGIS executive Thomas Haszard words to the effect that the contractors should jointly ask Defence to pay them a project management fee. 'Parker said words to the effect that the EMOS Providers should all go to Defence with a collective project management request,' the ACCC alleged. 'The EMOS Providers should go to Defence together and lobby for a program management fee,' Ms Parker allegedly conveyed, and 'the EMOS Providers should jointly ask Defence for more money for program management' the statement of claim asserts. Ventia denies this allegation and in her defence, Ms Parker claimed 'privilege against self-exposure to a penalty and in reliance on that privilege does not admit allegations in the statement of claim'. Mr Bonisch, Mr Collins, and Mr Campbell also did not admit to the allegations made against them and claimed relevant privilege. The penalties sought by the ACCC are the greater of $10m, three times the total benefit obtained, or 10 per cent of the annual turnover of the company when the conduct occurred.
NZ Herald
05-05-2025
- Business
- NZ Herald
Sweetwater Project: Far North councillor Mate Radich wants judicial review
But the project has been dogged with problems, and it has now soaked up more than $17 million of ratepayer money, with council insiders saying the final cost is likely to top $20m, but the council denies it will reach that level. It missed two deadlines over the past two years, but water was finally delivered into the public water supply in February. Radich has been critical of the rising costs of the project for several years and says he still does not know the full cost of the project. Radich said he will speak to the rationale of the motion at Thursday's meeting and hopes to get the support of his fellow councillors for a judicial review. 'This has been dogged by problems from the very start. It's just going to add even more costs to this. And I still have not been able to get the full costs of this from the council, despite asking several times,' Radich said. Last month the Northland Age revealed that the council and contractor face potentially big fines if they are found guilty of illegally discharging more than 90 million litres of groundwater into the Sweetwater Wetland. The council and Ventia are being prosecuted by the country's top environmental watchdog – the Government's Environmental Protection Authority (EPA) under the Resource Management Act (RMA). Each defendant faces a charge each of illegally discharging abstracted groundwater within 100m of the Sweetwater Bore Wetland and two charges each of undertaking earthworks or vegetation clearance within a 10m setback from the same natural wetland. They have entered not guilty pleas to the representative charges – meaning they happened on more than one occasion – and the matter will be back before the court on June 13. The maximum penalties for the offences are a fine of no more than $600,000. Far North District Council's Sweetwater Aquifer project has been dogged with problems since it started. Now a councillor wants a judicial review of the project. Radich was not surprised at the court case, saying it would add yet more costs to the project that he believed were already well out of control. He now needs the majority of councillors to support his notice of motion to start the judicial review process. What is a judicial review? A judicial review is where a judge is asked to review an action or a decision that has been made under a legal power. The judge looks at whether the way the decision was made was in accordance with the law. The judge won't usually decide whether the decision was the 'right' decision. Judicial reviews are important in New Zealand law to make sure the Government and government agencies act within the law, fairly and reasonably. Judicial reviews are always heard in the High Court. About 180 judicial reviews are heard each year. Only a person affected by a decision can apply for a judicial review. The respondent (the other side) is the person or government agency that made the decision which is being challenged. For a judicial review to be successful for the applicant, the court will need to be persuaded on the evidence that the decision-maker did not lawfully follow the proper decision-making process.
NZ Herald
05-05-2025
- Business
- NZ Herald
Far North councillor wants judicial review of Sweetwater project
But the project has been dogged with problems, and it has now soaked up more than $17 million of ratepayer money, with council insiders saying the final cost is likely to top $20m, but the council denies it will reach that level. It missed two deadlines over the past two years, but water was finally delivered into the public water supply in February. Radich has been critical of the rising costs of the project for several years and says he still does not know the full cost of the project. Radich said he will speak to the rationale of the motion at Thursday's meeting and hopes to get the support of his fellow councillors for a judicial review. 'This has been dogged by problems from the very start. It's just going to add even more costs to this. And I still have not been able to get the full costs of this from the council, despite asking several times,' Radich said. Last month the Northland Age revealed that the council and contractor face potentially big fines if they are found guilty of illegally discharging more than 90 million litres of groundwater into the Sweetwater Wetland. The council and Ventia are being prosecuted by the country's top environmental watchdog – the Government's Environmental Protection Authority (EPA) under the Resource Management Act (RMA). Each defendant faces a charge each of illegally discharging abstracted groundwater within 100m of the Sweetwater Bore Wetland and two charges each of undertaking earthworks or vegetation clearance within a 10m setback from the same natural wetland. They have entered not guilty pleas to the representative charges – meaning they happened on more than one occasion – and the matter will be back before the court on June 13. The maximum penalties for the offences are a fine of no more than $600,000. Radich was not surprised at the court case, saying it would add yet more costs to the project that he believed were already well out of control. He now needs the majority of councillors to support his notice of motion to start the judicial review process. What is a judicial review? A judicial review is where a judge is asked to review an action or a decision that has been made under a legal power. The judge looks at whether the way the decision was made was in accordance with the law. The judge won't usually decide whether the decision was the 'right' decision. Judicial reviews are important in New Zealand law to make sure the Government and government agencies act within the law, fairly and reasonably. Judicial reviews are always heard in the High Court. About 180 judicial reviews are heard each year. Only a person affected by a decision can apply for a judicial review. The respondent (the other side) is the person or government agency that made the decision which is being challenged. For a judicial review to be successful for the applicant, the court will need to be persuaded on the evidence that the decision-maker did not lawfully follow the proper decision-making process.
