Professor Damodaran used his model to explain that the terminal growth rate will not affect the firm value.
The thing I dont understand is why the cash flows in fifth year(the year in high growth rate) will be affected in accordance with the change in terminal growth rate?
As you can see, the free cash flow in year 5 is 80.53 with terminal growth rate of 5%,96.63 with terminal growth rate of 4%, and 161.05 with terminal growth rate of 0%.
Can you explain why? I am not familiar with this model.
The model involves the "expected reinvestment rate" at year before the stable growth.
Expected growth rate= ROC* reinvestment rate
The higher the expected terminal growth rate, the higher the expected reinvestment rate, and hence the less the cash flow at year before stable or terminal growth, and vice versa.
Basically it is expected growth rate, so in year 5 we have to use the growth rate in year 6 to get the reinvestment rate in year 5 and hence free cash flow.
aunloke, I no look at fimacorp price from angle of valuation. Looking more to privatisation and distribution to kfima shareholders. Waiting for kfima to cross over 2.20
Pradeep, Tony, good result of Fimacor does not warrant it to rise more than 8.00 if it does it's something more than meet the eyes and this is what I'm looking for.
Aunloke I guess you are smelling it right but we must have the holding power. The second issue is if M & A comes into play how the shareholders of KFIMA will benefit. I believe correct me if I am wrong it will benefit FIMA CORP shareholders more by looking at their share movement. By the way the market is in a correction mood
I hold this Kfima for many year since 0.80, the company with very steady growth but not aggressive enough and price stagnant because of their management...I would buy more when seeing company ESOS slow down/stop and share buy back started.
very easy satisfied management at least in current business they are in. no aggresive to expand. buy this share is like old parking attendance sitting in booth collecting cents from passer-by.
I hold for one year + and the return is only the lousy 3-4% ! The management is not doing enough where with pile of cash sitting in the bank doing nothing !! Really disappointed.
War or no war fundamental intact ,no debts so why worry ,be happy when up down be happy can buy more now support 2.05 let see whether can breck 2.03 and 2.00
KFIMA waiting 2 years +- maintain 10% +- movement all the time, time to prove it u can fly. base on the latest EPS and the incresing of FIMACORP + CPO RM 2850 ++ since highest 2009. Sit tight and keep !
When suddenly its price memontum strikes to rm3+ those impatience fella will knock their heads on the wall wondering why they dont buy when price struggles below rm2. That moment of time will be materialize soon. this is just a patient game.
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MQ Trader 3111 views | 3 d ago
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New IPO: The largest mini-market player and a leading groceries retailer in Malaysia, 99 Speed Mart Retail Holdings Bhd aims to list on the Main Market!
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Overweight
229 posts
Posted by Overweight > 2014-02-25 09:34 | Report Abuse
Beautiful gain from Fimacorp these few days, Kfima expected to have decent gain also :) don't miss out this plantation wave again.