kitle made some calculations assuming the following auctions...

kitle made some calculations assuming the following auctions would be inline with the previous. This ended up being true. The price of pearls have been kept contained.

@kitle

https://hotcopper.com.au/threads/ann-kobe-auction-result-and-march-quarter-sales-update.7963064/page-24?post_id=73479330

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I think the calculations are wrong

Calculations were using as assumptions

4x3Q24 = 3.4M
3xKobe April = 5.6M
eps = 9M/442M = 0.02



But we cannot do this.
If we take the original book value, we need to use the residual income model, in which the income of each year only add onto the book value if the income is higher than the book value multiplied by the hurdle rate.

https://en.wikipedia.org/wiki/Residual_income_valuation

So this is a mix between a discount model with a terminal value and a residual income valuation model.

Instead we should have discounted the book value with the hurdle rate at present value as we use that as the terminal value (and not the source value as in the residual income valuation model)

where 0.12 is the book value, and we cannot assume any growth on the book value because all earnings are considered owner earnings and not reinvested.

Interestingly enough, this leads to 0.18, the max price we reached



Maybe at most we could consider a growth on the book value in line with inflation