DOW Intrinsic Valuation

Have a look at this report from Investoweb

"Currently Trading at a DISCOUNT of 89%
Valuation (Intrinsic) Price: $1.06

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Price: 0.56 @ 4/11/02 (+0.01) 52 Week Range: 0.49 - 0.92
% Move last 3 mths: -6.7% Av. Monthly Volume: 1.5 (m)
Market Cap. ($m): 534.4 GICS Sector: Industrials
Shares On Issue (m): 954 Dividends Paid: Apr, Nov

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Share Price History
Discount or Premium to Intrinsic Share Value
$1.06 Intrinsic Value per Share
$0.56 Last Share Price
89% DISCOUNT
Key Values used in Calculations
Owners Earnings $73,526,000 Owners Earnings = Net Profit After Tax + Depr. & Amort. - Cap. Expenditure.

Growth Rate 10.000% Once establishing Owners Earnings we must then establish an assumed growth rate for the next ten years. By utilising a constant growth rate for ten years, a consistent and stable multiple is provided.
The Australian 10 Year Bond Rate represents the most appropriate domestic 'risk free' rate of return (note: Buffet utilises the US 30 Year Bond Rate). This rate is used to discount the assumed growth rate for owners earnings, thereby adding a conservative outlook to the valuation.

Once the assumed growth rate has been entered and the appropriate discount rate applied, a second stage, more conservative growth rate is entered and applied to the period following the initial ten years. This second stage growth rate is normally a value below the 10 Year Bond Rate.
Discount Rate (10 Year Bond Rate) 5.5%
Growth Rate (2nd Stage) 4.000%
Capitalisation Rate 1.50%

Intrinsic Value of Company $1,009,230,291 A valuation mehodology similar to the 'Buffett Methodology' is then utilised to calculate an Intrinsic Value of the entire Company.
Intrinsic Value Per Share 1.06 This value breaks down the Valuation / Intrinsic Value to a per share worth (ie, an assumed 'fair value' share price, based upon the current number of shares outstanding).

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Company History
Downer EDI Limited is a service oriented, multi-disciplined organisation focused on infrastructure maintenance, engineering, construction, telecommunications, mining and resource services. The company's major business divisions: Mining (Roche Mining) - is one of the three largest mining services providers in Australia. Engineering (Downer Engineering) - provides telecommunications, civil engineering and construction services. Its key markets are Australia, New Zealand, Hong Kong, Singapore, Papua New Guinea and the Pacific. Infrastructure (Works Infrastructure) - provides maintenance and construction services for roads and highways and other forms of infrastructure such as water supply and drainage, waste water treatment and refuse disposal. It is based in New Zealand and Western Australia. Resource Services (Century Resources) - provides resource drilling services for the oil and gas, mineral and geothermal sectors. It operates in Australia (mineral and onshore oil and gas), New Zealand (geothermal) and in Indonesia (onshore oil and gas).

Activities
Downer EDI Limited is a service oriented, multi-disciplined organisation focused on infrastructure maintenance, engineering, construction, telecommunications, mining and resource services.
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