Lost,Very interesting analysis. The weakening AUD should also...

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muscat

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02/10/19

21:58

Post #: 40695121
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Originally posted by lost: ↑

Hi Everyone

Currently reading book "Benjamin Graham and the Power of Growth Stocks" and thought I would share the back of the envelope Intrinsic Value calculations I did. The calculations demonstrate the under valuation of PAC.

Intrinsic Value Calculation based on historical growth is as follows:
8.5 (Note 1) + [2 x Growth Rate] = ANSWER x Underlying EPS
8.5+[2x10.2(Note 2)]=28.9 x $0.43
=$12.427 (Intrinsic Value of Pacific Current based on achieved growth rate during a troublesome period)

With the takeover of Proterra Investment Partners contributing 12.5% to underlying NPAT to previous years earnings, it is assumed the next year could easily add 20% growth and continue into the future.

Intrinsic Value Calculation based on revised growth of 20% per annum is as follows:
8.5 + [2 x 20] = 48.5 x $0.43
= $20.855 (Intrinsic Value of Pacific Current based on a reasonable forecast growth figure for the next year or two)

In simple terms, based on Intrinsic Value Calculation PAC is worth somewhere between $12.427 and $20.855.
Due to PAC historic restructure and troublesome merger, value above was not visible. The fog is clearing despite some anomalies like Nereus and Seizert. Market should revalue based on above and growth rates likely to be achieved by PAC's portfolio of boutique fund managers. The previous financial year shows good growth where PAC owned good growth Fund Managers (like Carlisle) for part of the year. There will also be an uplift in ROC partners earnings, so there are too many growth factors outweighing negativity now.

Best of Luck (Eat 'em alive Tigers!)
Lost

Notes:
Note (1)8.5 is the assumed Price Earnings Rate of a 0% growth company, or a 12% earnings yield (not dividend yield). Some of the lower growth Australian Banks currently a bit more than Ben Graham's rate, they are:
1) ANZ=Share Price: $28.63 EPS: $2.628 or 10.89 PE Ratio or 9.18% Earnings Yield
2) NAB=Share Price: $29.90 EPS: $2.323 or 12.87 PE Ratio or 7.77% Earnings Yield
Note (2)
PAC average Growth Rate over two years is 7.2+13.2=20.4/2=10.2%.
PAC growth rates are based on:
2018growth rate of 7.2% is based on growth rate of underlying NPAT of FY17=16.6M to FY18=17.8M (17.8M-16.6M=1.2M. 1.2M/16.6M=7.2%). EPS is negative due to increase of shares on issue due to restructure.
2019 growth rate of 12.6% is based on growth rate of underlying EPS. FY18=$0.38 FY19=$0.43 ($0.43-$0.38=$0.05. $0.05/$0.38=13.2%)

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Lost,

Very interesting analysis. The weakening AUD should also add upside.

PAC Price at posting: $6.90 Sentiment: None Disclosure: Held
2 Upvote

0 Great analysis

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(20min delay)
Last $10.76		Change 0.010(0.09%)		Mkt cap ! $561.1M

Open	High	Low	Value	Volume
$10.71	$10.79	$10.70	$65.34K	6.093K

Buyers (Bids)

No.	Vol.	Price($)
5	12	$10.76

Sellers (Offers)

Price($)	Vol.	No.
$10.77	200	2

View Market Depth

No.	Vol.	Price($)
6	28	10.760
7	38	10.750
2	133	10.740
3	1521	10.730
1	31	10.720

Price($)	Vol.	No.
10.770	200	2
10.780	80	1
10.790	220	2
10.800	8116	2
10.810	154	2

Last trade - 13.59pm 20/08/2024 (20 minute delay)

PAC (ASX) Chart

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