6: Discount Cash Flow Model 1 Valuation on MMODE 7 apr 2015
Table 6.1: Assumptions Current stock price $0.45 Share outstanding (Mil) 162,709 This year FCF (Avg last 4 years) $9,615 Next year's FCF (mil) $10,095 Growth for the next 5 and 10 years 5.0% 3% Teminal growth rate, g 3.00% Discount rate, R 15.0%
Table 6.2: DCFA PV of FCFF of core operations $89,000 Non-operating cash $44,192 Investment in Properties Investment in Associates $8,368 Debts ($1,415) PV of FCFE $140,145 Less minority interest $0 0.00% FCFE $140,145 Number of shares 162709 FCF per share $0.86 91% MOS 48%
Intrinsic Value of Mmode is RM0.86. Potential gain of 91%!
The management didn't reveal in Q2 report how they managed to reduce the cost of sales and operating expenses, otherwise, we can have a clue if the improvement can be sustained in quarters to come. Anyone has any opinion to share ?
In FY14, Mmode's revenue was higher compared to FY13 but the net profit was dragged down by the higher cost of sales and operating expenses, and hence it's share price. The recent Q2 FY15 result showed significant reduction in cost of sales and operating expenses. Thus, if Mmode management can sustain the improvement in cost/expenses, FY15 net profit is going to recover even if the revenue stays flat. In past few quarterly reports, the management stressed that they wanted to reduce the cost of sales and operating expenses, seems like the efforts are starting to bear fruit now. If net profit recovers, I expect the share price would follow.
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
kentg03
971 posts
Posted by kentg03 > 2015-07-21 18:21 | Report Abuse
everyday no volumn