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Yahoo
6 days ago
- Business
- Yahoo
Estimating The Fair Value Of Tiong Nam Logistics Holdings Berhad (KLSE:TNLOGIS)
The projected fair value for Tiong Nam Logistics Holdings Berhad is RM0.56 based on 2 Stage Free Cash Flow to Equity With RM0.67 share price, Tiong Nam Logistics Holdings Berhad appears to be trading close to its estimated fair value Tiong Nam Logistics Holdings Berhad's peers seem to be trading at a higher premium to fair value based onthe industry average of -4,169% How far off is Tiong Nam Logistics Holdings Berhad (KLSE:TNLOGIS) from its intrinsic value? Using the most recent financial data, we'll take a look at whether the stock is fairly priced by taking the expected future cash flows and discounting them to their present value. Our analysis will employ the Discounted Cash Flow (DCF) model. Models like these may appear beyond the comprehension of a lay person, but they're fairly easy to follow. Companies can be valued in a lot of ways, so we would point out that a DCF is not perfect for every situation. If you want to learn more about discounted cash flow, the rationale behind this calculation can be read in detail in the Simply Wall St analysis model. This technology could replace computers: discover the 20 stocks are working to make quantum computing a reality. We are going to use a two-stage DCF model, which, as the name states, takes into account two stages of growth. The first stage is generally a higher growth period which levels off heading towards the terminal value, captured in the second 'steady growth' period. To begin with, we have to get estimates of 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. Generally we assume that a dollar today is more valuable than a dollar in the future, so we discount the value of these future cash flows to their estimated value in today's dollars: 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 Levered FCF (MYR, Millions) RM34.4m RM36.0m RM37.5m RM39.1m RM40.7m RM42.2m RM43.8m RM45.5m RM47.2m RM48.9m Growth Rate Estimate Source Est @ 5.05% Est @ 4.63% Est @ 4.33% Est @ 4.12% Est @ 3.98% Est @ 3.88% Est @ 3.81% Est @ 3.76% Est @ 3.72% Est @ 3.70% Present Value (MYR, Millions) Discounted @ 16% RM29.8 RM27.0 RM24.4 RM22.0 RM19.8 RM17.8 RM16.0 RM14.4 RM12.9 RM11.6 ("Est" = FCF growth rate estimated by Simply Wall St)Present Value of 10-year Cash Flow (PVCF) = RM195m 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 16%. Terminal Value (TV)= FCF2034 × (1 + g) ÷ (r – g) = RM49m× (1 + 3.6%) ÷ (16%– 3.6%) = RM427m Present Value of Terminal Value (PVTV)= TV / (1 + r)10= RM427m÷ ( 1 + 16%)10= RM101m The total value is the sum of cash flows for the next ten years plus the discounted terminal value, which results in the Total Equity Value, which in this case is RM297m. The last step is to then divide the equity value by the number of shares outstanding. Compared to the current share price of RM0.7, 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. We would point out that the most important inputs to a discounted cash flow are the discount rate and of course the actual 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 Tiong Nam Logistics Holdings 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 16%, 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. See our latest analysis for Tiong Nam Logistics Holdings Berhad Valuation is only one side of the coin in terms of building your investment thesis, and it ideally won't be the sole piece of analysis you scrutinize for a company. DCF models are not the be-all and end-all of investment valuation. 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. If a company grows at a different rate, or if its cost of equity or risk free rate changes sharply, the output can look very different. For Tiong Nam Logistics Holdings Berhad, there are three essential aspects you should further research: Risks: For example, we've discovered 3 warning signs for Tiong Nam Logistics Holdings Berhad (1 doesn't sit too well with us!) that you should be aware of before investing here. 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 Top Analyst Picks: Interested to see what the analysts are thinking? Take a look at our interactive list of analysts' top stock picks to find out what they feel might have an attractive future outlook! 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) 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. 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
01-03-2025
- Business
- Yahoo
Results: Hong Leong Bank Berhad Beat Earnings Expectations And Analysts Now Have New Forecasts
Hong Leong Bank Berhad (KLSE:HLBANK) just released its quarterly report and things are looking bullish. The company beat expectations with revenues of RM1.6b arriving 4.8% ahead of forecasts. Statutory earnings per share (EPS) were RM0.56, 6.4% ahead of estimates. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year. Check out our latest analysis for Hong Leong Bank Berhad Following the latest results, Hong Leong Bank Berhad's 15 analysts are now forecasting revenues of RM6.34b in 2025. This would be a satisfactory 2.4% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to accumulate 2.2% to RM2.15. In the lead-up to this report, the analysts had been modelling revenues of RM6.31b and earnings per share (EPS) of RM2.16 in 2025. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates. It will come as no surprise then, to learn that the consensus price target is largely unchanged at RM25.41. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Hong Leong Bank Berhad, with the most bullish analyst valuing it at RM31.40 and the most bearish at RM23.20 per share. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable. Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's pretty clear that there is an expectation that Hong Leong Bank Berhad's revenue growth will slow down substantially, with revenues to the end of 2025 expected to display 4.9% growth on an annualised basis. This is compared to a historical growth rate of 6.7% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 6.2% annually. Factoring in the forecast slowdown in growth, it seems obvious that Hong Leong Bank Berhad is also expected to grow slower than other industry participants. The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Hong Leong Bank Berhad's revenue is expected to perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates. With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Hong Leong Bank Berhad going out to 2027, and you can see them free on our platform here.. We don't want to rain on the parade too much, but we did also find 1 warning sign for Hong Leong Bank Berhad that you need to be mindful of. 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.
