Discounted Cash Flow (DCF) Analysis Unlevered

Arezzo Indústria e Comércio S.A. (ARZZ3.SA)

$78.56

+0.97 (+1.25%)

All numbers are in Millions, Currency in USD

Stock DCF: 305.16 | 78.56 | undervalue

Operating Data

Year A/P	2018 Actual	2019 Actual	2020 Actual	2021 Actual	2022 Actual	2023 Projected	2024 Projected	2025 Projected	2026 Projected	2027 Projected
Revenue	1,526.66	1,679.23	1,590.99	2,923.83	4,233.73	5,644.76	7,526.07	10,034.40	13,378.71	17,837.62
Revenue (%)
EBITDA	219.33	297.19	159.15	551.72	703.44	875.53	1,167.33	1,556.38	2,075.10	2,766.70
EBITDA (%)
EBIT	178.45	216.86	78.05	445.97	537.41	648.64	864.83	1,153.06	1,537.35	2,049.73
EBIT (%)
Depreciation	40.88	80.32	81.10	105.75	166.03	226.89	302.50	403.33	537.75	716.97
Depreciation (%)

Balance Sheet Data

Year A/P	2018 Actual	2019 Actual	2020 Actual	2021 Actual	2022 Actual	2023 Projected	2024 Projected	2025 Projected	2026 Projected	2027 Projected
Total Cash	235.80	277.68	561.16	262.56	476.43	987.68	1,316.86	1,755.75	2,340.91	3,121.10
Total Cash (%)
Account Receivables	-	-	-	-	-	-	-	-	-	-
Account Receivables (%)
Inventories	146.36	173.87	283.01	436.52	743.86	792.85	1,057.10	1,409.41	1,879.15	2,505.44
Inventories (%)
Accounts Payable	110.12	134.97	399.19	574.71	671.66	856.45	1,141.89	1,522.46	2,029.87	2,706.39
Accounts Payable (%)
Capital Expenditure	-48.61	-65.61	-46.19	-168.88	-233.14	-240.21	-320.27	-427	-569.32	-759.06
Capital Expenditure (%)

Weighted Average Cost Of Capital

Share price	$ 78.56
Beta	0.724
Diluted Shares Outstanding	91.64
Cost of Debt
Tax Rate	10.19
After-tax Cost of Debt	7.21%
Risk-Free Rate
Market Risk Premium
Cost of Equity	7.203
Total Debt	776.41
Total Equity	7,199.32
Total Capital	7,975.73
Debt Weighting	9.73
Equity Weighting	90.27
Wacc

Build Up Free Cash

Year A/P	2018 Actual	2019 Actual	2020 Actual	2021 Actual	2022 Actual	2023 Projected	2024 Projected	2025 Projected	2026 Projected	2027 Projected
Revenue	1,526.66	1,679.23	1,590.99	2,923.83	4,233.73	5,644.76	7,526.07	10,034.40	13,378.71	17,837.62
EBITDA	219.33	297.19	159.15	551.72	703.44	875.53	1,167.33	1,556.38	2,075.10	2,766.70
EBIT	178.45	216.86	78.05	445.97	537.41	648.64	864.83	1,153.06	1,537.35	2,049.73
Tax Rate	16.09%	20.88%	10.95%	14.52%	10.19%	14.52%	14.52%	14.52%	14.52%	14.52%
EBIAT	149.73	171.58	69.50	381.24	482.68	554.43	739.22	985.59	1,314.07	1,752.03
Depreciation	40.88	80.32	81.10	105.75	166.03	226.89	302.50	403.33	537.75	716.97
Accounts Receivable	-	-	-	-	-	-	-	-	-	-
Inventories	-	-27.51	-109.14	-153.51	-307.34	-48.99	-264.25	-352.31	-469.74	-626.29
Accounts Payable	-	24.85	264.22	175.52	96.95	184.78	285.44	380.57	507.41	676.52
Capital Expenditure	-48.61	-65.61	-46.19	-168.88	-233.14	-240.21	-320.27	-427	-569.32	-759.06
UFCF	142	183.64	259.50	340.12	205.17	676.91	742.65	990.17	1,320.17	1,760.17
WACC
PV UFCF						631.44	646.24	803.76	999.66	1,243.31
SUM PV UFCF										4,324.41

Terminal Value

Growth in perpetuity method:
Long-term growth rate
WACC (%)	7.20
Free cash flow (t + 1)	1,795.37
Terminal Value	34,526.36
Present Value of Terminal Value	24,388.04

Intrinsic Value

Enterprise Value	28,712.45
Net Debt	747.58
Equity Value	27,964.87
Shares Outstanding	91.64
Equity Value Per Share	305.16