what is a reasonable target price?, page-2

At the current market cap of $350m and using a P/E of 10 then maintainable earnings would need to be about $35m per annum - is this realistic ?

Absolutely not. But a company in growth could easily hold a PE of 20 and be fair value, and a company in very high growth could hold one of 30.

But even by these metrics INA is overvalued. I think it's currently being buoyed by a combination of forward NAV valuations and plain old speculation.

We may see NAV up to 40c or so by next results, but earnings will still be low - underlying profit last FY was only $6M total. It will be less than $10M this FY IMO. At $10M and a PE of 20 it's worth $200M, at PE 30 it's worth $300M.

Dividend will probably be somewhere between 1 and 2c unfranked, which at current price is a yield of 1.9 to 3.8%. I think 1.5c is a likely figure, which is 2.8%.

So realistically I think INA is currently slightly overvalued on any hard metric you care to use - NAV, PE or div yield.

But that doesn't mean it's overvalued in terms of forward earnings if you're talking about 3+ years into the future. Earnings growth could rise very steeply if the MHE gamble pays off.

I do think though that there are speculators in the house now, and as such INA is vulnerable to a rapid retrace if they all decide to take profits at the same time. 40c looks like a good support level in terms of fundamentals though.