Or another way of valuing NCK could be:- 1H 23 NPAT = $60.6M-...

Or another way of valuing NCK could be:
- 1H 23 NPAT = $60.6M
- Assume 2H 23 NPAT would be 30% less on pcp. That would make it $27.3M, as last year they did $39M in the 2nd half. This is very conservative compared to the 15% drop embedded in consensus forecast.
- FY23 NPAT would therefore be $$88M
- Assume FY24 remains another difficult year for retail businesses and NCK's NPAT will drop another 10%. This would lead to $79.2M as FY24 NPAT.
- Assume starting from there on, we will enter into an era of new norm and retail business will regain their usual growth trajectory. Let's be conservative again and only project a CPI-based 2.5% growth a year for NCK in revenue and earnings for their existing store network. All meaningful growth would have to come from new stores.
- NCK announced that their ultimate goal would be to have 176-186 stores (86 for NCK, 90-100 for Plush). If they can open 6 stores a year, which is their target for this year, they will have around 180 stores in 2035. This is 68% more than their current store network.
- With all the assumptions combined, in FY2035, their NPAT would be something like $79.2M x (1+2.5%)^11x (1+68%) = $175M
- If we apply 13x PE for a mature, high quality and reliable dividend-payer business, NCK's market value in 2035 would be $2.28B, which is a capital gain of 8.9% p.a. based on today's $820M market cap.
- If we add the 7.4% dividend yield, which will certainly grow over the years, we are talking about an investment that will very likely bring us an annual return of over 15% for the next decade.

All IMHO & DYOR