Part 4---Written by s2746943 Lu YU
4.1 Valuation
Valuation is one of the important indicators to determine the how much money the investors have to pay to perfect a sale of a business (Fernandez, 2007, pp13-30). Free Cash Flow, Dividend Discount Model and P/E ratio are used to estimate the value of Brambles in 2012.
4.1.1 Free Cash Flow (FCF)
Free cash flow is the amount of cash that a company has left over after it has paid all of its expenses, including investments.
Table 13 Free Cash Flow Analysis (,000)
Free Cash Flow Analysis($000) 2013 2012 2011 2010
EBIT 1,095,900 1,102,600 877,600 813,200
NOPAT 767,130 771,820 614,320 303,030
Operating capital(OC) 6,358,300 6,140,900 5,879,800 3,775,000
NOWC -212,700 -52,500 -574,700 -267,100
FCFE 365,790 -667,400 1,687,630 231,410
FCFF 549,730 510,720 -1,490,480 969,940
The table above demonstrates free cash flow of Brambles in the last four fiscal years. The EBIT of Brambles kept increasing, particularly from 2011 to 2012, driven by the former acquisitions. But high acquisition expenses resulted in high current liabilities and caused the NOWC and FCFF in 2011 were negative. In addition, the investment in Asia area in 2012 made more profits for Brambles caused the improvement of NOWC.
Table 13 Intrinsic value per share under FCF approach (, 000)
Based on the FCF table above, the intrinsic value per share is estimated at $6.58. While the market value is $9.34, indicating the stock is overvalued. The poor intrinsic value is due to large debts (3,680,715) and low cash ($128,900).
4.1.2 Dividend Discount Model
The dividend discount model (DDM) is a procedure for valuing the price of a stock by using predicted dividends and discounting th...
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...are USA, Australia and Europe and the other minor locations constitute the main sales of Brambles.
Table 17 Geographical Segments (,000)
In North America, the operations are more focused on the pallets service for local market. The total sales in 2013 were $2,817 million, accounts for 47.84 % of total sales.
The second largest market is Europe. The total sales and sales percentage were $ 2,083.5 million and 35.37% as well.
In Australia, the underlying volumes were stable. This market segment has proven to be particularly resilient to strong Australian dollars market which affected local economic extremely. In 2013, the total sales in Australia were $635.7 million and accounts for 10.79% of total sales.
In the other minor locations like China, India, the total sales of the other minor locations in 2013 were $353.2 million, accounts for 6 % of total sales.
China, there would be a multitude of early adopters interested in checking out the product online
the world. " The Big Three" hold nearly 75% of the market and produce over 8
The industry market size in the US is estimated at $303 billion in fiscal 2014, $221 billion attributed to consumer market (private home owners) and the remaining to the professional market
o Shoes and clothing - $125 billion. o Electronics and appliances - $85 billion. o
residual earnings is $ 19.06. This number is much lower than the average share price at which Gainesboro’s shares were trading at for 2004 ($ 29.15), and would suggest that Gainesboro is still overvalued. This model backs up the valuation given by the discounted cash flow if dividends are to be considered and paid.
*The total global sales till year 2014 for Yum! was more than US$13 billion with major divisions at India & China
...ries such as Spain, Belgium, UK, Japan, and China. Future growth can be obtained through positioning current brands in those emerging markets.
The basic earnings per ordinary share in 2016 is RM19.14 and RM14.30 in 2015. This shows that the ordinary share had been increased RM4.84 compare to 2016 based on 2015. In the other hand, this company had declared a first interim single-tier dividend of 10 sen per ordinary share amounting to RM22.88 million in respect of the financial year ended 31 December 2016. They sold their ordinary shares of RM400,000,000 units of RM0.50 per each in 2016 and RM200,000,000 units of RM0.50 per each in 2015 to their shareholders. It is increased from 2015 to 2016 with 200,000,000 units. The other investments that available for sale is RM1000 same as in 2015 and 2016.
The reason I select Masteel’ stock to analyse is because I have looked back the historical stock chart of Masteel from 2009 to 2015, it is a declining price movement. Masteel achived the highest RM1.5 price in 2011 but it reduced to RM0.4 price in 2015. This historical price of stock in Masteel made me curios on its current intrinsic value and are this stock is worth to invest now? Thus, I would like to analyse Masteel’s stock value through stock valuation in part B, to figure out whether Masteel is worth to invest now and expect the price will increase in future.
Most of the revenue of 2013 has been brought by the Media Networks and Parks and Resort segments, bringing in 20.36 and 14.09 billion USD respectively. The other three segments, studio entertainment, consumer products and interactive have brought 5.98, 3.86 and 1.06 billion USD respectively.
The total global market size of Fragrance & Flavour industry is of the order of USD 20 billions (Rs. 100,000 Crores). Indian share is about 10 % of the globe, which is USD 2000 Millions (Rs. 10000 Crores).
According to Buffett, intrinsic value is an all-important concept that offers the only logical approach to evaluating the relative attractiveness of investments and businesses. Intrinsic value can be defined simply: It is the discounted value of the cash that can be taken out of a business during its remaining life.
market shares every year (The Grimsey Review, 2013: 8). According to Davidson Pavitt (1997: 38)
3. The current price of the firm’s 10%, $100 par value, quarterly dividend, perpetual preferred stock is $113.10. Harry Davis would incur flotation costs of $2.00 per share on a new issue.