TSX:CUS.DB.D - Post by User
Comment by
pm1231on Apr 06, 2014 9:52am
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Post# 22417276
RE:RE:Thanks Nawar
RE:RE:Thanks Nawar My analysis seems to back up Nawar`s almost dollar for dollar. To use simple discounted cashflow analysis
Assumptions
a) Cashflows are perpetuities (reasonable assumption until they sell chemcials business or NATO - should be stable cashflows with some immaterial fluctuations)
b) Debt profile should come down over time as cashflow increases - but assume for arguments sake it remains constant for this analysis (and to be rather conservative)
c) "Low Value" target uses higher discount factors to reflect perceived current risk in the market (12% for 2014, 11% for 2015, and back down to 10% by 2016)....this is excessive - but to generate a conservative price target - will use this for arguments sake.
d) "High Value" target uses more approproate discount factors to more reflect actual versus perceived risk (10% 2014, 9% for 2015, 8% for 2016)
e) Both "high" and "low" reflect lower risk as time moves on and execution issues resolved (hence graduated discount factors)
f) Cashflow Assumptions (Taken from various brokerages)
2014 - $126M
2015 - $188M
2016 - $200M
I won't get into the calculation (those who can do DCF analysis should find the above parameters sufficent to arrive at the bottom)....
Price Target - Lowball Estimate - Perceived Market Value - $5.92
Price Target - Probable Estimate - "Actual" Market Value - $7.94