Assessing Mabion's Value: DCF and Peers Analysis
Aa
Share
VALUATION
We valued Mabion shares using 2 methods: DCF and peers, assigning them weights of 75% and 25%, respectively. On this basis, we estimated the target price of the company’s stock at a 9-month horizon at 22.9 PLN per share. We assign a lower-than-usual weighting to the peers valuation due to Mabion's lack of a diversified customer base, and thus, in our view, less comparability with peer companies.
DCF VALUATION:
Value of cash flows discounted at the beginning of September 2023,
Net debt as of December 31, 2022: -33 million PLN (net cash),
Effective tax rate: in the period 2023-2026 we assume zero - the company at the end of 2022, in addition to the recognized deferred tax asset of PLN 13.2 million, had an unrecognized tax credit available under the zone permits of PLN 36.7 million; after 2026 we assume a rate of 19%,
CAPEX: we assume capital expenditures of PLN 60 million in 2023, PLN 20 million in 2024 and 2025, and PLN 15 million per year thereafter; we do not assume new plant construction (Mabion II),
Growth rate (g)1%,
risk free rate 5.63% (avg 10Y Polish Treasuries yield); beta 1; market risk premium 6.28% (Damodoran for Poland).
PEERS VALUATION
The comparative analysis we base on selected foreign contract manufacturers (CDMOs), foreign CROs and Poland's Selvita operating also in the CRO area. In our view, the discount in Mabion's valuation relative to peers is justified due to the fact that they have a long history of operations in the CDMO/CRO area and a diversified customer base, unlike Mabion, which is currently based on an order from Novavax and is only trying to acquire other customers. Therefore, in determining the target price, we ultimately assign a 25% weighting to the peers valuation. P/E, EV/EBITDA ratios are included, with weights placing the greatest emphasis on 2025, which is after the period of guaranteed revenues from Novavax. Based on this analysis, we set the valuation per share at PLN 29.1.
