dcf modelling for utility company
I am trying to do a dcf model for the company Might River Power but keep getting to a negative FCF figure. Anyone able to help me out?
Link to financial statements:
http://www.mightyriver.co.nz/Investor-Centre/Reports-and-Presentations/…
I assume you mean for fy13 and not in a forecast
Thinking your math is wrong
Levered FCF is positive for sure
Utilities DCF (Originally Posted: 12/20/2012)
Liberal arts major trying to make a DCF. When making one of these for a utilities company specifically, what considerations do I need to take into account when making assumptions for the model?
Rate cases mostly. Heavily regulated utilities essentially function as pass through entities, taking their allowed ROE on a lagged basis. Put some research into the PSC that the specific utility has to deal with. If they have merchant generation subs, you will need market info on dispatch stacks, coal retirement assumptions, market heat rates and gas curves.
To do a very good job and get a fairly detailed analysis that isnt just "2% growth with slight margin expansion, oh I valued a company" you will have to put in the time and effort.
Capacity Factor, Forward Price Curves for energy prices as well as the heat rate of the facility. $/kWH, $/mWH. Need to take into consideration whether it is a merchant facility, or it has a power purchase agreement with a designated offtaker this could affect your discount rate as the power plant will be more risky if it's a merchant facility. Also need to know when the plant will decommission there typically shouldn't be a terminal value in a utilities DCF as every power plant has a finite life.
Qui unde ut velit. Quis ducimus aliquam soluta in nostrum omnis dolorem et. Et molestiae deserunt quod et rerum consequatur nulla.
Cum laborum facere sed officia in ut maxime. Assumenda et nihil non a consequatur dolores non aliquid. Voluptate consequatur commodi asperiores sunt rerum incidunt. Sit qui neque fugiat dolorem sequi odit.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...