Here is my first value analysis of a company. I plan to build on this, so what you see is the bare bones, or the base of the structure if you like. A huge thanks to Roger Montgomery (An Australian fund manager who has consistently outperformed the market) for making his knowledge and expertise freely available.
A Value analysis of Trade Me Group Limited
Debt: $29m compared to $66m currently held in cash | 8/10 Return on Equity: 12.9% and increasing | 4/10 Dividend payout ratio: 81% | 2/10 Intrinsic Value: $2.26 compared to share price $6.07 | 0/10 Reputation: Good. As far as I know, it is still the go-to trading website in NZ. | 9/10 Prospects: The NZ market seems to be fully saturated. The closest overseas market is Austalia, which is already occupied by Gumtree and Ebay. | 2/10 Competitive advantage: Yes. Brand awareness, market monopoly, good reputation, operated in NZ. 7/10 Management: Backing the takeover from Apax is a fantastic move for their shareholders as it pushes up the share price. However, the 81% dividend payout ratio may not be in the best interest of the shareholders, as more value would be added if they found a way to reinvest in growing the company. 5/10 Other notes: $687m of 'accounting goodwill' on the books represents 81% of total assets. This is a huge warning sign | 1/10
Conclusion: I would sell. In the coming years, if the take over goes ahead, I predict writedowns from Apax (say 2 - 4 years from now).
This is not financial advice, just the opinion of an amateur analyst. Ideas for improvement are welcome.