FCFE Excel Template

Prepared by Dheeraj Vaidya, CFA, FRM

dheeraj@wallstreetmojo.com

visit - www.wallstreetmojo.com
Free Cash Flow to Equity Example

Prepared by Dheeraj Vaidya

www.wallstreetmojo.com
Example: FCFE
Alibaba IPO
FCFE Model

Free Cash Flow Projections - FCFE Historicals

(RMB in Million Except Per Share Amount Mar-10 Mar-11 Mar-12

Free Cash Flow to Equity

Net Income
Add: Depreciation & amortization
Add: Change in working capital
Less: Capex
Net Borrowings
FCFE

Cost of Equity
Infinite growth rate

Free cash flow to Equity of explicit period (2015E to 2019E)

Mar-10 Mar-11 Mar-12
Cash Flows
NPV of explicit period

Terminal value as of 2019

Terminal value @ perpetual growth (2019) Mar-10 Mar-11 Mar-12
Terminal value as of 2019
NPV of terminal value

DCF Valuation Summary

DCF calculation as of Valuation (RMB) Valuation (US$)

NPV of explicit period FCFE 273,162 43,942
NPV of terminal value using FCFE 467,003 75,124
Equity value 740,165 119,124
+ Cash $48,550 7,810
+ Short term investments, restricted cash, investment s 12,587 2,025
+Investment in equity investees 13,009 2,093
+ Alipay valuation 24,866 4,000
Stock Option Value $3,207 516
Adjusted Equity Value 835,970 134,535

Share Price 341.68 54.99

 Sensitivity Analysis

134.54 10%
1%
2%

growth
3%
4%
5%
6.0%
als Forecasts
Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18

28,635 36,443 46,640 59,483

2,691 5,069 8,089 11,938
3,884 4,861 6,292 8,167
(9,225) (11,679) (14,855) (18,979)
(9,976) (10,030) (3,800) (479)
16,009 24,665 42,365 60,131

12.0%
3%

Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18

16,009 24,665 42,365 60,131
273,162

Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18

0 0 - -
467,003
 Cost of Equity (ke)
11% 12% 13% 14%
Mar-19 Mar-20 Mar-21 Mar-22

74,027 84,151 91,435 93,931

16,831 22,717 29,348 36,493
9,982 7,324 5,630 3,327
(24,018) (27,716) (30,558) (32,238)
(479) (479) (479) (479)
76,343 85,997 95,375 101,034

Mar-19 Mar-20 Mar-21 Mar-22

76,343 85,997 95,375 101,034

Mar-19 Mar-20 Mar-21 Mar-22

- - - 1,156,283