Nice model @Tom73. Good to see a few minds ticking over and asking questions. Our 2 models really highlight just how much a few small adjustments can result in a huge differnce in "fair value". Onto the next stock for me!

Yea that terminal growth changes the game in a DCF. Every percentage change in the terminal growth would +- 15% of the existing valuation. The safest way to navigate is sensitivity analysis. 

@elapaso96

Perpetual growth rate I used was 3% and a required rate of return of 10%. So i discounted future cashflows by 10% ^ number of years. Terminal value using the 2 percentages with your standard formula.

eCommerce penetration in Aus is very low compared to the rest of the world and last year Australia had the largest ecommerce % growth in the world. I think this is a fundamental shift for aussies and we'll see online stick around. I think the 12% growth falling to 7% by 2030 is rather conservative. Yes competition is a risk but I think theres plenty of market share to go around. 

Kogan has a strong balance sheet and I believe the correct acquisitions will only add strength to the balance sheet. I've allowed somewhat for future dilution as well.

Appreciate the feedback.

@CHill

If the Australian ecommerce market has low penetration like you say, then your assumptions are not outlandish. Kogan does have a good balance sheet, but the acquisition of Mighty Ape will cost $122M, which represent a decent chunk of Kogan's cash in the balance sheet. Granted, they are making the acquisition payment in traches, Kogan is betting on growth in operating cashflow to fund the acquisition. I am uncertain on the "I believe the correct acquisitions will only add strength" - Kogan is paying quite a lot for the Mighty Ape acquisition. There is a risk of the acquisition not working out. We will only know the outcome of the acquisition in the following years.     

Good that you use 3% perpetual growth, in line with GDP.

The discount rate of 10% is fairly high but good to be conservative I guess. 

Good valuation mate :) 

Thanks @bear77 will repost now

Yep, that worked.  What was the issue?  File size, file name or file type?

File name, didn't like the & I had in there. Thanks for the help

Your valuation for Kogan @CHill looks good, and quite comprehensive, however I'm not sure if they can keep increasing revenue at that rate every year as well as gradually increasing their gross margin % as you have suggested they will.  With a gross margin of 28%, there could be an argument mounted that they are already over-earning, and that history suggests that their margins are more likely to reduce over time than to increase.  However, if they DO achieve those metrics, then yes, they would be worth more than where they are trading now, but I'd want a decent MOS (margin of safety on your valuation) to compensate for the possibility of things not all going 100% to plan in terms of the optimistic assumptions in the valuation.

Appreciate the feedback @bear77. The first 3 years of revenue growth are analyst expectations, usually when I do my DCFs I like to use my own numbers but in this case, I used theirs for simplicity. As for the remaining years I based my expectations on the following: Low penetration of ecommerce in Aus relative to the US and other countries, this sector should grow over time. I expect KGN to improve their market share of australian retail as ecommerce picks up traction. As for the improving gross margin, i do see your point however Kogan marketplace will only improve their gross margin as this sector of the business grows. What I haven't considered is the affect that Mighty Ape will have on their overall margins, I imagine there will be significant investment required to truly benefit in the synergies of these businesses.