As I was valuating Silverlake axis AR 2017 using the excel template, I get a PE ratio of 12.3x which is significantly lower compared to of Yahoo Finance and Bloomberg, so I was wondering if there is any error I did in picking the numbers from AR.
For the exceptional items to be excluded from the profit, may I know is it acceptable to only consider commission and rental income from the other income segment? Which resulted in me getting S$116.6m profit attributable to shareholder excluding excp item.
May I know how do we calculate the intrinsic value when using P/CF or P/E valuation?
Lastly, as Silverlake is a software company, so can we assume they dont have any inventory?
Hi Jou Ling, I’m also working on the excel template for Silver lake Axis. I’ve get a low PE and I realised its due to the different currency. Share price of $0.54 is in SGD while profits in RM. I’ve converted the share price to RM and you will get a figure closer to 30x PE for 2017.
For exceptional items, I’ve only deduct the gain from disposal of GIT shares.
For inventory, I have included contract work in progress.
Just for sharing and comments, if any. Thanks
Hi Jou Ling,
I agree with Koh that we need convert from MRY to SGD before we calculate the PE or PCF. Otherwise it may look inflated as the company is traded in SGD. For CashFlow, it is quite lumpy in some years (although you can try to use average of five years) so it may not be the best valuation metric. Instead, I opted for Profit Before Tax for its maintenance and enhancement and insurance processing which are more stable over its past ten years. Then I multiply the PBT by PE of 25x. I actually presented this company in the IQ workshop. Did you attend?
Software-based company usually doesn’t have inventory.
While reading the news coverage on silverlake axis, it is of the opinion that challenges ahead could bring the company’s forward earning adversely through Y2020. Would this justify a ‘white and see’ position even though the current valuation of 15x looks attractive?
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