This morning's tip. The market is currently valuing AZL at AUD114M. The question is, based on the information we have, minus risk, plus confidence, at what price should the market value should be? Is that value higher or lower than what the market is pricing the company, therefore is it overvalued or undervalued?
Right now, today, below for your consideration. Take with a grain of salt as many factors can quickly change the valuation of companies eg. a disaster or a huge uplift to future forecast IRR or lower/higher projected capex/opex.
We have AZL as undervalued at AUD150M:
- We project that the company will be valued by the market in the AUD200M range (enterprise value higher than this), or at higher confidence AUD250M-300M (such as if/when the market takes kindly to the PFS, macro environment, etc)
- At AUD150M MC, share price = 4.1c
- At AUD200M MC, share price = 5.4-5.5c (cap raise value at 5.1c a discount)
- At AUD250 MC, share price = 6.8c
- At AUD300 MC, share price = 8.1-8.2c
- The above value assumes no changes to total number of issued shares. If more are issued, or options exercised for example then this changes the calculation.
I know I'm posting this a lot but for good reason. It's become apparent to me that people aren't assessing the numbers right and just going by share price.
It's not the share price that is constantly revised. It is the MC - every event impacts the MC and all investors consistently and regularly assess the enterprise value vs market value of the businesses we invest in... which then changes the share price - the "x" or answer in the equation.
Also, everyone will have their own MC value estimates... and "the market" is (supposedly) the average of that... but those with the most accurate of combined information are more able to assess whether the market is overvaluing or undervaluing the stock/company/business.
So it's actually a no brainer, at 3.4c per share AZL is heavily undervalued especially when compared to its peers.
Also, although LKE is a good barometer, it's not a peer anymore. The more accurate competitor/peer is SLI and E3... and in many respect VUL (but VUL is different market (EU) and different process etc it's hard to compare with so stick with SLI and E3.
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