Latest news with #ThaiBeveragePublicCompanyLimited
Yahoo
3 days ago
- Business
- Yahoo
A Look At The Intrinsic Value Of Thai Beverage Public Company Limited (SGX:Y92)
The projected fair value for Thai Beverage is S$0.52 based on 2 Stage Free Cash Flow to Equity With S$0.47 share price, Thai Beverage appears to be trading close to its estimated fair value The ฿0.63 analyst price target for Y92 is 21% more than our estimate of fair value Does the June share price for Thai Beverage Public Company Limited (SGX:Y92) reflect what it's really worth? Today, we will estimate the stock's intrinsic value by estimating the company's future cash flows and discounting them to their present value. This will be done using the Discounted Cash Flow (DCF) model. Before you think you won't be able to understand it, just read on! It's actually much less complex than you'd imagine. We would caution that there are many ways of valuing a company and, like the DCF, each technique has advantages and disadvantages in certain scenarios. Anyone interested in learning a bit more about intrinsic value should have a read of the Simply Wall St analysis model. AI is about to change healthcare. These 20 stocks are working on everything from early diagnostics to drug discovery. The best part - they are all under $10bn in marketcap - there is still time to get in early. 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 begin with, we have to get estimates of the next ten years of cash flows. Where possible we use analyst estimates, but when these aren't available we extrapolate the previous free cash flow (FCF) from the last estimate or 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, and so the sum of these future cash flows is then discounted to today's value: 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 Levered FCF (THB, Millions) ฿44.2b ฿39.1b ฿40.9b ฿22.4b ฿19.8b ฿18.4b ฿17.6b ฿17.1b ฿17.0b ฿17.0b Growth Rate Estimate Source Analyst x4 Analyst x4 Analyst x4 Analyst x1 Est @ -11.47% Est @ -7.32% Est @ -4.42% Est @ -2.38% Est @ -0.96% Est @ 0.04% Present Value (THB, Millions) Discounted @ 7.9% ฿41.0k ฿33.6k ฿32.5k ฿16.5k ฿13.6k ฿11.7k ฿10.3k ฿9.3k ฿8.6k ฿8.0k ("Est" = FCF growth rate estimated by Simply Wall St)Present Value of 10-year Cash Flow (PVCF) = ฿185b After calculating the present value of future cash flows in the initial 10-year period, we need to calculate the Terminal Value, which accounts for all future cash flows beyond the first stage. For a number of reasons a very conservative growth rate is used that cannot exceed that of a country's GDP growth. In this case we have used the 5-year average of the 10-year government bond yield (2.4%) to estimate future growth. In the same way as with the 10-year 'growth' period, we discount future cash flows to today's value, using a cost of equity of 7.9%. Terminal Value (TV)= FCF2034 × (1 + g) ÷ (r – g) = ฿17b× (1 + 2.4%) ÷ (7.9%– 2.4%) = ฿315b Present Value of Terminal Value (PVTV)= TV / (1 + r)10= ฿315b÷ ( 1 + 7.9%)10= ฿147b The total value, or equity value, is then the sum of the present value of the future cash flows, which in this case is ฿332b. To get the intrinsic value per share, we divide this by the total number of shares outstanding. Compared to the current share price of S$0.5, the company appears about fair value at a 10% discount to where the stock price trades currently. 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. Now the most important inputs to a discounted cash flow are the discount rate, and of course, the actual cash flows. Part of investing is coming up with your own evaluation of a company's future performance, so try the calculation yourself and check your own 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 Thai Beverage 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 7.9%, which is based on a levered beta of 0.856. 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 Thai Beverage Strength Debt is well covered by earnings. Dividends are covered by earnings and cash flows. Weakness Earnings growth over the past year underperformed the Beverage industry. Dividend is low compared to the top 25% of dividend payers in the Beverage market. Opportunity Annual revenue is forecast to grow faster than the Singaporean market. Current share price is below our estimate of fair value. Threat Debt is not well covered by operating cash flow. Annual earnings are forecast to grow slower than the Singaporean market. Whilst important, the DCF calculation 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. For example, changes in the company's cost of equity or the risk free rate can significantly impact the valuation. For Thai Beverage, there are three fundamental elements you should consider: Risks: We feel that you should assess the 2 warning signs for Thai Beverage (1 is potentially serious!) we've flagged before making an investment in the company. Future Earnings: How does Y92's growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with our free analyst growth expectation chart. Other High Quality Alternatives: Do you like a good all-rounder? Explore our interactive list of high quality stocks to get an idea of what else is out there you may be missing! PS. Simply Wall St updates its DCF calculation for every Singaporean stock every day, so if you want to find the intrinsic value of any other stock 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. 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Yahoo
3 days ago
- Business
- Yahoo
A Look At The Intrinsic Value Of Thai Beverage Public Company Limited (SGX:Y92)
The projected fair value for Thai Beverage is S$0.52 based on 2 Stage Free Cash Flow to Equity With S$0.47 share price, Thai Beverage appears to be trading close to its estimated fair value The ฿0.63 analyst price target for Y92 is 21% more than our estimate of fair value Does the June share price for Thai Beverage Public Company Limited (SGX:Y92) reflect what it's really worth? Today, we will estimate the stock's intrinsic value by estimating the company's future cash flows and discounting them to their present value. This will be done using the Discounted Cash Flow (DCF) model. Before you think you won't be able to understand it, just read on! It's actually much less complex than you'd imagine. We would caution that there are many ways of valuing a company and, like the DCF, each technique has advantages and disadvantages in certain scenarios. Anyone interested in learning a bit more about intrinsic value should have a read of the Simply Wall St analysis model. AI is about to change healthcare. These 20 stocks are working on everything from early diagnostics to drug discovery. The best part - they are all under $10bn in marketcap - there is still time to get in early. 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 begin with, we have to get estimates of the next ten years of cash flows. Where possible we use analyst estimates, but when these aren't available we extrapolate the previous free cash flow (FCF) from the last estimate or 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, and so the sum of these future cash flows is then discounted to today's value: 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 Levered FCF (THB, Millions) ฿44.2b ฿39.1b ฿40.9b ฿22.4b ฿19.8b ฿18.4b ฿17.6b ฿17.1b ฿17.0b ฿17.0b Growth Rate Estimate Source Analyst x4 Analyst x4 Analyst x4 Analyst x1 Est @ -11.47% Est @ -7.32% Est @ -4.42% Est @ -2.38% Est @ -0.96% Est @ 0.04% Present Value (THB, Millions) Discounted @ 7.9% ฿41.0k ฿33.6k ฿32.5k ฿16.5k ฿13.6k ฿11.7k ฿10.3k ฿9.3k ฿8.6k ฿8.0k ("Est" = FCF growth rate estimated by Simply Wall St)Present Value of 10-year Cash Flow (PVCF) = ฿185b After calculating the present value of future cash flows in the initial 10-year period, we need to calculate the Terminal Value, which accounts for all future cash flows beyond the first stage. For a number of reasons a very conservative growth rate is used that cannot exceed that of a country's GDP growth. In this case we have used the 5-year average of the 10-year government bond yield (2.4%) to estimate future growth. In the same way as with the 10-year 'growth' period, we discount future cash flows to today's value, using a cost of equity of 7.9%. Terminal Value (TV)= FCF2034 × (1 + g) ÷ (r – g) = ฿17b× (1 + 2.4%) ÷ (7.9%– 2.4%) = ฿315b Present Value of Terminal Value (PVTV)= TV / (1 + r)10= ฿315b÷ ( 1 + 7.9%)10= ฿147b The total value, or equity value, is then the sum of the present value of the future cash flows, which in this case is ฿332b. To get the intrinsic value per share, we divide this by the total number of shares outstanding. Compared to the current share price of S$0.5, the company appears about fair value at a 10% discount to where the stock price trades currently. 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. Now the most important inputs to a discounted cash flow are the discount rate, and of course, the actual cash flows. Part of investing is coming up with your own evaluation of a company's future performance, so try the calculation yourself and check your own 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 Thai Beverage 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 7.9%, which is based on a levered beta of 0.856. 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 Thai Beverage Strength Debt is well covered by earnings. Dividends are covered by earnings and cash flows. Weakness Earnings growth over the past year underperformed the Beverage industry. Dividend is low compared to the top 25% of dividend payers in the Beverage market. Opportunity Annual revenue is forecast to grow faster than the Singaporean market. Current share price is below our estimate of fair value. Threat Debt is not well covered by operating cash flow. Annual earnings are forecast to grow slower than the Singaporean market. Whilst important, the DCF calculation 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. For example, changes in the company's cost of equity or the risk free rate can significantly impact the valuation. For Thai Beverage, there are three fundamental elements you should consider: Risks: We feel that you should assess the 2 warning signs for Thai Beverage (1 is potentially serious!) we've flagged before making an investment in the company. Future Earnings: How does Y92's growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with our free analyst growth expectation chart. Other High Quality Alternatives: Do you like a good all-rounder? Explore our interactive list of high quality stocks to get an idea of what else is out there you may be missing! PS. Simply Wall St updates its DCF calculation for every Singaporean stock every day, so if you want to find the intrinsic value of any other stock 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.
Yahoo
23-03-2025
- Business
- Yahoo
Taking A Look At Thai Beverage Public Company Limited's (SGX:Y92) ROE
One of the best investments we can make is in our own knowledge and skill set. With that in mind, this article will work through how we can use Return On Equity (ROE) to better understand a business. To keep the lesson grounded in practicality, we'll use ROE to better understand Thai Beverage Public Company Limited (SGX:Y92). Return on equity or ROE is a key measure used to assess how efficiently a company's management is utilizing the company's capital. Put another way, it reveals the company's success at turning shareholder investments into profits. Trump has pledged to "unleash" American oil and gas and these 15 US stocks have developments that are poised to benefit. The formula for ROE is: Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity So, based on the above formula, the ROE for Thai Beverage is: 13% = ฿31b ÷ ฿229b (Based on the trailing twelve months to September 2024). The 'return' is the yearly profit. That means that for every SGD1 worth of shareholders' equity, the company generated SGD0.13 in profit. See our latest analysis for Thai Beverage By comparing a company's ROE with its industry average, we can get a quick measure of how good it is. The limitation of this approach is that some companies are quite different from others, even within the same industry classification. You can see in the graphic below that Thai Beverage has an ROE that is fairly close to the average for the Beverage industry (12%). That isn't amazing, but it is respectable. Even if the ROE is respectable when compared to the industry, its worth checking if the firm's ROE is being aided by high debt levels. If a company takes on too much debt, it is at higher risk of defaulting on interest payments. Our risks dashboardshould have the 2 risks we have identified for Thai Beverage. Virtually all companies need money to invest in the business, to grow profits. That cash can come from issuing shares, retained earnings, or debt. In the case of the first and second options, the ROE will reflect this use of cash, for growth. In the latter case, the use of debt will improve the returns, but will not change the equity. That will make the ROE look better than if no debt was used. Thai Beverage does use a high amount of debt to increase returns. It has a debt to equity ratio of 1.02. There's no doubt its ROE is decent, but the very high debt the company carries is not too exciting to see. Debt increases risk and reduces options for the company in the future, so you generally want to see some good returns from using it. Return on equity is useful for comparing the quality of different businesses. In our books, the highest quality companies have high return on equity, despite low debt. If two companies have the same ROE, then I would generally prefer the one with less debt. Having said that, while ROE is a useful indicator of business quality, you'll have to look at a whole range of factors to determine the right price to buy a stock. The rate at which profits are likely to grow, relative to the expectations of profit growth reflected in the current price, must be considered, too. So I think it may be worth checking this free report on analyst forecasts for the company. If you would prefer check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity and low debt. 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.
