Friday 15 August 2014

Absolute PE Valuation - APOLLO (6432)

Let's calculate the intrinsic value for APOLLO based on Vitaliy Katsenelson's Absolute PE Valuation Model 

[1] No Growth PE

APOLLO's  Market Cap is around 400M, and a no growth P/E of 7 (EY: 14.2%) will be used here to be prudent.

[2] Expected EPS Growth Rate





Adjusted EPS CAGR for T4Q, Latest 5 FY and Latest 10 FY.
 

I am using the average of above EPS CAGR as my expected EPS Growth Rate - 8.054%

[3] Dividend Yield

Lates FY Dividend = 0.25
Stock Price = 5.05
DY = 4.95%

[4]  Business Risk




 The ROE, ROA, ROIC and CROIC is in a up trend mode, and this indicate that APOLLO  has a good busines model, moat & capable management.

And there is 0% of intagible asset on APOLLO which indicate that the grow achieved by organic but not via acquisitions which could lead to issues later.

In view of above, I give a 5% premium to the business risk.

[5] Financial Risk



APOLLO have a high current ratio, 0 debt and strong free cash flow. Hence, a 10% premium is applied.

[6] Earning Visibility



 Revnue, Gross Profit, Operating Profit, Net Profit and Operating Cash Flow is in a clear uptrend mode. Thus, a 5% premium is applied.

[7] EPS
Average of Latest FY and T4Q EPS will be used - 0.3653

Based on above, we can calculate the intrinsic value for APOLLO

 

Vitaliy Katsenelson's Absolute PE Valuation Model  suggest 7.636 as the intrinsic value. And, this provide u a MOS of 33.865%

You may view below post if you interest to read more on APOLLO valuation and analysis:-

You may interest to view my writeup on Financial Statement Analysis template to help you to kick start for your hunting:-


References:-
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