Calculating The Fair Value Of Marine & General Berhad (KLSE:M&G)
The projected fair value for Marine & General Berhad is RM0.24 based on 2 Stage Free Cash Flow to Equity
Current share price of RM0.25 suggests Marine & General Berhad is potentially trading close to its fair value
When compared to theindustry average discount of -76%, Marine & General Berhad's competitors seem to be trading at a greater premium to fair value
How far off is Marine & General Berhad (KLSE:M&G) from its intrinsic value? Using the most recent financial data, we'll take a look at whether the stock is fairly priced by projecting its future cash flows and then discounting them to today's value. This will be done using the Discounted Cash Flow (DCF) model. It may sound complicated, but actually it is quite simple!
We generally believe that a company's value is the present value of all of the cash it will generate in the future. However, a DCF is just one valuation metric among many, and it is not without flaws. Anyone interested in learning a bit more about intrinsic value should have a read of the Simply Wall St analysis model.
View our latest analysis for Marine & General Berhad
We're using the 2-stage growth model, which simply means we take in account two stages of company's growth. In the initial period the company may have a higher growth rate and the second stage is usually assumed to have a stable growth rate. To start off with, we need to estimate the next ten years of cash flows. Seeing as no analyst estimates of free cash flow are available to us, we have extrapolate the previous free cash flow (FCF) from the company's last reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. We do this to reflect that growth tends to slow more in the early years than it does in later years.
A DCF is all about the idea that a dollar in the future is less valuable than a dollar today, so we need to discount the sum of these future cash flows to arrive at a present value estimate:
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
Levered FCF (MYR, Millions)
RM41.5m
RM31.6m
RM26.7m
RM24.1m
RM22.7m
RM22.0m
RM21.8m
RM21.9m
RM22.2m
RM22.7m
Growth Rate Estimate Source
Est @ -35.42%
Est @ -23.72%
Est @ -15.52%
Est @ -9.78%
Est @ -5.77%
Est @ -2.96%
Est @ -0.99%
Est @ 0.39%
Est @ 1.35%
Est @ 2.03%
Present Value (MYR, Millions) Discounted @ 15%
RM35.9
RM23.7
RM17.4
RM13.6
RM11.1
RM9.3
RM8.0
RM6.9
RM6.1
RM5.4
("Est" = FCF growth rate estimated by Simply Wall St)Present Value of 10-year Cash Flow (PVCF) = RM137m
The second stage is also known as Terminal Value, this is the business's cash flow after the first stage. The Gordon Growth formula is used to calculate Terminal Value at a future annual growth rate equal to the 5-year average of the 10-year government bond yield of 3.6%. We discount the terminal cash flows to today's value at a cost of equity of 15%.
Terminal Value (TV)= FCF2034 × (1 + g) ÷ (r – g) = RM23m× (1 + 3.6%) ÷ (15%– 3.6%) = RM198m
Present Value of Terminal Value (PVTV)= TV / (1 + r)10= RM198m÷ ( 1 + 15%)10= RM47m
The total value, or equity value, is then the sum of the present value of the future cash flows, which in this case is RM184m. To get the intrinsic value per share, we divide this by the total number of shares outstanding. Relative to the current share price of RM0.3, the company appears around fair value at the time of writing. Valuations are imprecise instruments though, rather like a telescope - move a few degrees and end up in a different galaxy. Do keep this in mind.
The calculation above is very dependent on two assumptions. The first is the discount rate and the other is the cash flows. If you don't agree with these result, have a go at the calculation yourself and play with the assumptions. The DCF also does not consider the possible cyclicality of an industry, or a company's future capital requirements, so it does not give a full picture of a company's potential performance. Given that we are looking at Marine & General Berhad as potential shareholders, the cost of equity is used as the discount rate, rather than the cost of capital (or weighted average cost of capital, WACC) which accounts for debt. In this calculation we've used 15%, which is based on a levered beta of 2.000. Beta is a measure of a stock's volatility, compared to the market as a whole. We get our beta from the industry average beta of globally comparable companies, with an imposed limit between 0.8 and 2.0, which is a reasonable range for a stable business.
Whilst important, the DCF calculation ideally won't be the sole piece of analysis you scrutinize for a company. It's not possible to obtain a foolproof valuation with a DCF model. Instead the best use for a DCF model is to test certain assumptions and theories to see if they would lead to the company being undervalued or overvalued. For example, changes in the company's cost of equity or the risk free rate can significantly impact the valuation. For Marine & General Berhad, there are three additional factors you should assess:
Risks: Consider for instance, the ever-present spectre of investment risk. We've identified 3 warning signs with Marine & General Berhad (at least 1 which is concerning) , and understanding them should be part of your investment process.
Other Solid Businesses: Low debt, high returns on equity and good past performance are fundamental to a strong business. Why not explore our interactive list of stocks with solid business fundamentals to see if there are other companies you may not have considered!
Other Environmentally-Friendly Companies: Concerned about the environment and think consumers will buy eco-friendly products more and more? Browse through our interactive list of companies that are thinking about a greener future to discover some stocks you may not have thought of!
PS. The Simply Wall St app conducts a discounted cash flow valuation for every stock on the KLSE every day. If you want to find the calculation for other stocks just search here.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
2 hours ago
- Yahoo
First Commonwealth Financial (FCF) is a Top Dividend Stock Right Now: Should You Buy?
Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. But when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments. Cash flow can come from bond interest, interest from other types of investments, and of course, dividends. A dividend is that coveted distribution of a company's earnings paid out to shareholders, and investors often view it by its dividend yield, a metric that measures the dividend as a percent of the current stock price. Many academic studies show that dividends account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases. Based in Indiana, First Commonwealth Financial (FCF) is in the Finance sector, and so far this year, shares have seen a price change of -5.85%. Currently paying a dividend of $0.14 per share, the company has a dividend yield of 3.39%. In comparison, the Banks - Northeast industry's yield is 2.82%, while the S&P 500's yield is 1.55%. Looking at dividend growth, the company's current annualized dividend of $0.54 is up 4.9% from last year. Over the last 5 years, First Commonwealth Financial has increased its dividend 4 times on a year-over-year basis for an average annual increase of 4.10%. Any future dividend growth will depend on both earnings growth and the company's payout ratio; a payout ratio is the proportion of a firm's annual earnings per share that it pays out as a dividend. First Commonwealth Financial's current payout ratio is 39%, meaning it paid out 39% of its trailing 12-month EPS as dividend. Looking at this fiscal year, FCF expects solid earnings growth. The Zacks Consensus Estimate for 2025 is $1.43 per share, which represents a year-over-year growth rate of 2.14%. Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. However, not all companies offer a quarterly payout. For instance, it's a rare occurrence when a tech start-up or big growth business offers their shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. That said, they can take comfort from the fact that FCF is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy). Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report First Commonwealth Financial Corporation (FCF) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
9 hours ago
- Yahoo
Latest News In E-Commerce - Greece's Social Commerce Market Set for Significant Growth
The recent "Greece Social Commerce Market Intelligence and Future Growth Dynamics Databook" report provides a comprehensive overview of the social commerce sector in Greece, highlighting its expected growth trajectory. The market is forecasted to grow significantly, reaching approximately USD 2.94 billion by 2025 and further expanding to USD 4.21 billion by 2030. This growth is underpinned by insights into market dynamics, consumer behavior, and retail strategies across categories such as clothing, electronics, and travel. The report also examines the impact of different social platforms and payment methods on market opportunities, offering a detailed segmentation by demographics and location. Elsewhere in the market, was trading firmly up 16.8% and closing at HK$22.70. In the meantime, trailed, down 20% to close at $1.00. Leverage Amazon's advancements in AI for AWS and advertising for potential gains. Discover more on these growth opportunities in the full narrative on the company. On a related note, don't miss our Market Insights article on automation's e-commerce impact, exploring AI-driven logistics transformations—read it now! closed at $63.11 down 1.2%. settled at $120.33 down 1.3%. finished trading at $213.20 down 2%. This week, Amazon partnered with Rebag to enhance its Luxury Stores offering, and launched the Amazon Key Access Control System for smart building access. Discover the full array of 258 E-Commerce Stocks, featuring Sinotrans, Hisense Home Appliances Group and Etsy, right here. Seeking Other Investments? Rare earth metals are the new gold rush. Find out which 24 stocks are leading the charge. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Sources: Simply Wall St "Greece Social Commerce Market Databook 2025, with Focus on Tomigo, Broombids, Facebook and Instagram " from Research and Markets on GlobeNewswire (published 09 June 2025) Companies discussed in this article include SEHK:2562 NYSE:NKE NYSE:BABA NasdaqGS:AMZN and OTCPK:MALG. This article was originally published by Simply Wall St. Have feedback on this article? Concerned about the content? with us directly. Alternatively, email editorial-team@ Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
10 hours ago
- Yahoo
Claritev's (NYSE:CTEV) investors will be pleased with their splendid 109% return over the last year
Unfortunately, investing is risky - companies can and do go bankrupt. But when you pick a company that is really flourishing, you can make more than 100%. For example, the Claritev Corporation (NYSE:CTEV) share price had more than doubled in just one year - up 109%. It's also good to see the share price up 94% over the last quarter. On the other hand, longer term shareholders have had a tougher run, with the stock falling 82% in three years. Now it's worth having a look at the company's fundamentals too, because that will help us determine if the long term shareholder return has matched the performance of the underlying business. This technology could replace computers: discover the 20 stocks are working to make quantum computing a reality. Claritev isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. Some companies are willing to postpone profitability to grow revenue faster, but in that case one would hope for good top-line growth to make up for the lack of earnings. In the last year Claritev saw its revenue shrink by 3.3%. We're a little surprised to see the share price pop 109% in the last year. It just goes to show the market doesn't always pay attention to the reported numbers. Of course, it could be that the market expected this revenue drop. The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers). It's probably worth noting we've seen significant insider buying in the last quarter, which we consider a positive. That said, we think earnings and revenue growth trends are even more important factors to consider. This free report showing analyst forecasts should help you form a view on Claritev We're pleased to report that Claritev shareholders have received a total shareholder return of 109% over one year. That certainly beats the loss of about 14% per year over the last half decade. The long term loss makes us cautious, but the short term TSR gain certainly hints at a brighter future. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Case in point: We've spotted 3 warning signs for Claritev you should be aware of, and 1 of them makes us a bit uncomfortable. There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of undervalued small cap companies that insiders are buying. Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on American exchanges. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
