Tegel IPO

[TheHunter]

Guys you're over complicating it still!

Easiest sense check of EV is FCF/discount rate (do the math, equals the same as a DCF calc with a TV but w no growth factored in).

So $45.3m/8.8% = $515m EV or $1.45 per share... before growth Interesting eh, a lot quicker and only 2c different from your valuation...

Keep it simple

[Te Whetu]

Guys you're over complicating it still!

Easiest sense check of EV is FCF/discount rate (do the math, equals the same as a DCF calc with a TV but w no growth factored in).

So $45.3m/8.8% = $515m EV or $1.45 per share... before growth Interesting eh, a lot quicker and only 2c different from your valuation...

Keep it simple

Um, no. I am not sure if you're joking... there are smilies... but going to assume you're not joking.

You could do $45.3m / (8.8% - 1.5%), that would get you close.

But if you want to assume growth into perpetuity (you should, given inflation) then you will need to use the gordon growth model.

You calculated enterprise value, assumed it was equity value, divided it by shares, and were close...

However, the fact that you got close was a coincidence, as you never adjusted net debt.

Sorry if it's just a joke. However, I don't want anyone ever trying to invest based on your logic.


Edit: 60 posts in almost 10 years... I'm on fire.

[TheHunter]

Ahh yes, I didn't read your edit there Te Whetu.. believe we are making the same point regarding the gordon growth model & over-complicating a DCF. And good spotting reg. debt, wrote that way too quickly as the pork was burning. My mistake raises a good point tho... valuations can be what you make them. Always ensure you use a discount rate applicable that suits you and double check those calcs!

Back to Tegel as getting off topic, hows those chicken prices doing?

[winner69]

Guys you're over complicating it still!

Easiest sense check of EV is FCF/discount rate (do the math, equals the same as a DCF calc with a TV but w no growth factored in).

So $45.3m/8.8% = $515m EV or $1.45 per share... before growth Interesting eh, a lot quicker and only 2c different from your valuation...

Keep it simple

Tegel FCF (Free Cash Flow) was actually $15.4m. So your sums The Hunter would give a EV of 49 cents (equity value less)

I agree with the comments made by Te Whetu

[winner69]

Tegel doesn't even cover it's cost of capital (ROIC about 6%/7%) so why should it's shares even trade at its book value of $1.31 ...market saying significantly improved future returns are expected

[winner69]

Back on topic -

From what I've seen in the supermarkets chicken prices are on the way down again

[hardt]

For the VALUATION AT 2.5% FCF & 10.5% DR valuation, you are calculating Terminal Value based on a 8.5% discount rate. This is having a material impact on your valuation.

Also, this is probably pedantic, but anyway... I am unsure of your valuation date; however, it looks like a while ago. One option is to:

• adjust the first years earnings based on how far through we are;
• discount mid-period;
• adjust net debt for dividends since April (increase debt); and
• adjust net debt for likely earnings since April (reduced debt, lets hope).

EDIT: Also, since you are increasing the cash flows at a constant rate, you should get the same result as if you just applied the Gordon Growth model to your first cash flow. As an example, using your second valuation (1.5% and 8.5%):

Enterprise value = 45.3*(1.015)/(0.088-0.015) = 629.86
Equity value = 629.86 enterprise value – 106.6 debt = 523.26
Share value = 523.26 equity value / 355.9 shares = $1.47 per share.

This is the same result as your DCF.

By undertaking a DCF, you might think you are putting in more 'science' than you actually have. All you have really said is share value is $1.47 at 1.5% perpetual growth and a 8.8% discount rate.


Also, disc. I have ~3-4% of my portfolio in TGH.

This was originally made for 6% in 2018 down to 1% in 2020 FCF growth.

These formulas auto populate using the models I have in excel, still needs some fine-tuning no doubt.

But yes, far simpler ways with linear growth.

[winner69]

See price fell from $14.81 in July to $14.21 in August

Lower than a year ago

Hope correlation with TGH share price is weak eh

Up to $14.67 in September

That's good

[hardt]

Up to $14.67 in September

That's good

This time last year we could see the prices plummet 10-15% lower to hit the bottom in December 12.81 - 13.50 range.

Signs are pointing towards a moderately good result for TGH, will have to wait and see how they capitalised on these better trading conditions.

Chart looks good too, setting up for a possible move over 133 resistance... has failed on 3 attempts though.

Attachment 9230

[winner69]

This time last year we could see the prices plummet 10-15% lower to hit the bottom in December 12.81 - 13.50 range.

Signs are pointing towards a moderately good result for TGH, will have to wait and see how they capitalised on these better trading conditions.

Chart looks good too, setting up for a possible move over 133 resistance... has failed on 3 attempts though.

Attachment 9230

well done hardt

that post got the shareprice moving again

must be onwards and upwards from here by the looks of your chart

back to ipo price ...what was that again