North West Egg Sales Business Plan — Returns, Scenarios and Sensitivity
A 16% base-case IRR and 2.1x, against downside and disease cases that breach covenants.
Section 30 of 31
Returns, Scenarios and Sensitivity
Jump to section
- 0. Executive Summary
- 1. Investment Thesis
- 2. Company Overview
- 3. Location
- 4. Problem and Value Proposition
- 5. Products and Pricing
- 6. Industry Analysis
- 7. Market Sizing
- 8. Customers and Channels
- 9. Competitive Landscape
- 10. Competitive Positioning
- 11. Business Model and Unit Economics
- 12. Go-to-Market Strategy
- 13. Operating Model
- 14. Farm Infrastructure and Capital Expenditure
- 15. Biosecurity and Animal Health
- 16. Management and Organisation
- 17. Strategic Plan
- 18. SWOT Analysis
- 19. Risk Analysis
- 20. ESG and Sustainability
- 21. Implementation Roadmap
- 22. Financial Plan: Key Assumptions
- 23. Financial Plan: Revenue Build
- 24. Financial Plan: Projected Income Statement
- 25. Financial Plan: Projected Cash Flow
- 26. Financial Plan: Projected Balance Sheet
- 27. Funding Requirement and Structure
- 28. Debt Serviceability and Break-Even
- 29. Returns, Scenarios and Sensitivity
- 30. Investment Case and Next Steps
Base-case equity return is 16% IRR and 2.1x; the downside and disease cases breach covenants and must be priced in
| Scenario | Y3 EBITDA | Min DSCR | Min cash | Y5 cash | Equity IRR | MOIC |
|---|---|---|---|---|---|---|
| Downside | R6.0m | 0.73x | (R0.9m) | R1.4m | -4.4% | 0.8x |
| Base | R9.3m | 1.24x | R1.6m | R10.6m | 16.0% | 2.1x |
| Upside | R12.6m | 1.79x | R1.5m | R18.5m | 27.6% | 3.5x |
| HPAI stress | R6.3m | 0.97x | R0.6m | R6.0m | 13.4% | 1.9x |
Equity returns, base case
Equity invested (100%)
R24.0m
Investor stake / cheque
70% / R16.8m
Entry valuation (post-money)
R24.0m at cost
Exit EV: 5.5x Y5 EBITDA
R55.7m
Downside: egg price −4%, feed +6%, lay rate −2%, sustained for five years. Upside: price +5%, feed −5%, lay +1.5%. HPAI: House 1 culled in month 5 of its second flock, no compensation, 11 months of lost output. In the downside, smoothed DSCR is below 1.0x to Year 4 and cash turns negative in Year 4, by R0.9m: the lender would need a reschedule or sponsors a top-up of about R2.5m.
Less net debt at exit
(R7.2m)
Exit equity value
R48.5m
Dividends Y3–Y5
R3.1m
Investor proceeds (70%)
R36.1m
Change in equity IRR (percentage points) versus base of 16.0%
| Category | Adverse | Favourable | |
|---|---|---|---|
| Egg price ±5% | -9.8 | 7.3 | |
| Feed price ±10% | -8.0 | 6.3 | |
| Lay rate ±3% | -5.0 | 4.3 | |
| Pullet price ±10% | -2.8 | 2.6 | |
| Capex ±10% | -1.9 | 2.3 | |
| Interest rate ±200 bps | -0.9 | 0.9 | |
| Exit multiple ±1.0x | -4.8 | 4.1 | MOIC / equity IRR |
2.1x / 16.0%
Project IRR (unlevered)
16.4%
Payback
At exit; dividends return 13%
The exit multiple is a model assumption, not market evidence. Each 1.0x moves IRR by about 4 points. Equity IRR sits close to project IRR because debt costs 11.5%: returns come from operations, not financial engineering.