Oh No - Another Valuation Thread!

At the risk of attracting the ire of some, I'm going to post A valuation model (just one of many) to try and help understand what are some of the things to look out for.

Notes:
1. There is NO TARGET PRICE. Just a set of assumptions about money. You can agree or disagree and every view is valid ... just the probability is different. The model spits our a "Fair Value" (the midpoint of the range of assumptions)

2. The model is a SNAPSHOT of a POINT IN TIME. Not my favored way of doing modelling (prefer a result based on probability curve) but it is useful for discussion.

3. Yes you could just do 10x FY'23 EBITDA and be done with it - low probability IMO

4. If you are still reading and DO NOT AGREE that $1 this time next year is worth less than $1 today then you wont like the model. The discount rate is key. This is NOT a company's weighted average cost of capital (WACC) nor is it the company's stock beta. It is a risk measurement that you as an investor are assigning to the set of assumptions used. The stock beta is market risk. WACC is to decide if the project yields a positive return on the capital invested.

5. I am posting a DCF type model (again not my favored way but it is commonly used and fairly well understood). Because it is a DCF model I am valuing how much cash this business generates over time, which is then discounted back to the "fair value" of that cash. As an investor while we think about buying we have to also think about selling. If I was running a PE firm for example, how much would I want to pay for that "fair value". As a seller how much will I give up to get the cash now. IMO getting 75% of the fair value is reasonable.

6. Certain assumptions are made on volume (which I took from Sep CR preso), ASP (took a $5K SC6 to start and then 91.5% of that price to get a SC5.5% price and then a steady decline over time ... which is conservative given I believe we are in a supply deficit market). The OTA have a huge impact and I am not a all sure it is correct in this model. I have emailed the company with questions, especially in relation to Yahua OTA. The overall avg price for SC6 from 2023 thru 2030 is US$3,560 ... bet accordingly.

7. Below is the snapshot. Fair Value ~ $1.80 so as investor I would/should be happy to buy/sell at 75% of that or ~$1.35.

8. If you see something wrong raise it - it probably is a mistake. If you see something you disagree with or it doesn't make sense bring ot up - it might be a bad assumption on my part.

9. Its just a point of view.




Lets see what today brings