TEA is a stock I hold, and based on my updated DCF valuation, I’m seriously considering adding more at the current price. My model estimates the fair value to be around $4.98 per share ($4 to $5.9 10th and 90th quantiles), while it’s trading at $2.55 — that’s a discount of about 95%, which gives it a large margin of safety.
TEA provides engineering and maintenance services across industries like mining, energy, and infrastructure (see @Rick #History and Ownership) — not the flashiest business, but essential and stable. The company has $110 million in debt, but also $25 million in cash, and it’s steadily profitable. Over the last year, it earned around $55 million in operating profit on $493 million in revenue, with decent margins and returns.
It’s also reasonably priced for its earnings. The forward P/E is under 13, and the P/FCF is just over 6 — both suggest the stock isn’t expensive. On top of that, ROIC is 16%, which shows it uses money efficiently — solid for a company its size.
TEA has been growing fast, with revenue likely up more than 20% this year, and my model assumes that growth will slow gradually over the next decade. Reinvestment rates start high around 50% and taper to 15% as it matures.
Of course, the company has some risks. It’s been expanding quickly through acquisitions, which can sometimes go wrong if not managed well. But even with cautious assumptions, my model suggests the business is worth significantly more than the market currently values it at.
At a current price of $2.55, and based on these numbers, I’m leaning toward increasing my position. Tasmea looks like a strong, growing business that’s still trading at a meaningful discount to what it’s really worth.

Some data and other valuation results
Market Cap: AUD $586.75 million
Shares Outstanding: 229.84 million
Debt: AUD $110.20 million
Cash: AUD $25.10 million
Tax Rate: 30%
Initial Revenue: AUD $493.30 million
Initial EBIT: AUD $54.80 million
Initial EBIT Margin: 11.1%
High Growth Rate: 21.1%
Stable Growth Rate: 3.0%
Average FCF Growth: 12.6%
Reinvestment Rate (avg): 18.1%
Return on Invested Capital (ROIC): 16.1%
Risk-Free Rate: 4.15%
Equity Risk Premium: 4.33%
Raw Beta / Adjusted Beta: 1.03 / 1.02
Cost of Equity: 8.55%
After-Tax Cost of Debt: 4.20%
WACC (High Growth / Stable): 8.00% / 8.27%
Enterprise Value: AUD $1,228.78 million
Equity Value: AUD $1,143.68 million
Intrinsic Value per Share: $4.9760
Current Market Price: $2.5500
DCF Margin of Safety: +95.14%