Key Insights The projected fair value for Magni-Tech Industries Berhad is RM1.80 based on Dividend Discount Model Magni-Tech Industries Berhad's RM2.13 share price indicates it is trading at similar levels as its fair value estimate When compared to the Magni-Tech Industries Berhad's competitors seem to be trading at a greater premium to fair value In this article we are going to estimate the intrinsic value of Magni-Tech Industries Berhad ( ) by projecting its future cash flows and then discounting them to today's value.
Our analysis will employ 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. Companies can be valued in a lot of ways, so we would point out that a DCF is not perfect for every situation.
For those who are keen learners of equity analysis, the may be something of interest to you. As Magni-Tech Industries Berhad operates in the luxury sector, we need to calculate the intrinsic value slightly differently. Instead of using free cash flows, which are hard to estimate and often not reported by analysts in this industry, dividends per share (DPS) payments are used.
Unless a company pays out the majority of its FCF as a dividend, this method will typically underestimate the value of the stock. The 'Gordon Growth Model' is used, which simply assumes that dividend payments will continue to increase at a sustainable growth rate forever. The dividend is expected to .