I usually avoid commenting on valuation, as it depends so much...

I usually avoid commenting on valuation, as it depends so much on assumptions we use (depending on our own view of the company).
But Atlas Pearls is quite a unique case.

1/ The simplest approach is probably to look at PE
Based on FY 23 results, the PE is 2.8 x.
Even if we use a tax rate of 25 %, we get a PE 23 of 3.5 x.
Usually, we get such a low PE for companies where there is a major uncertainty on short term results.
Given the large price increase for pearls, we know that it makes more sense to expect a large increase of their results in FY 24 rather than the opposite.

2/ Another approach is to look at P/B
Atlas is now valued with a P/B of 0.75 x.
This looks really low for a company which has generated a ROE of 27 % in FY 23 and 28 % on average during the last 3 years.
Once again, it would probably make sense to correct for a normal tax rate. In that case, ROE 23 would be around 21 %.
As ROE will probably remain high in FY 24, we can probably say that they will have a rather high ROE on a full 4 year cycle (what is estimated to be their cycle of production).
P/B of 0.75 does not seem to reflect ROE* estimated around 20 %+ on a cycle.

3/ Valuation based on free cash flow
In FY 23, they had a free cash flow of 6.1 m AUD, which corresponds to a free cash flow yield of over 30 %.
Once again, this is partly due to the fact they pay a very low level of taxes.
If there is a good visibility on their short term earnings, it is much more difficult to estimate their free cash flow as it will depend on their Capex level for 24 and 25, while the company has not given any guidance, except saying that they want to invest in a new boat and perhaps a new farm, without giving any figure.

So, there is a risk that, the high level of expected free cash flow will be partly absorbed by a higher Capex.
This may be a problem as there is not a great visibility on the return of these Capex (no return from the next farm expected before FY 26, while it is very difficult to estimate what will be the market conditions in 3 years).