RE:UI's share price Hi Laurence I agree with your numbers. I think your choice of a 7% cap yield could be challenged as this should change to reflect changes in interest rates/inflation etc. A lower interest rate environment deserves a higher PE ratio.
We know Urbanimmersive purchased Repa's with a 13-15 times PE multiple given that they acquired them at 2 times sales and with a 15% margin.
2/0.15 ~ 13.33
So we can assign a 13-15 times multiple on that.
The software revenue which is about 25% of expected future revenue should have a much higher PE multiple. For instance 25% of revenue has a PE multiple of 25 (arbitrary number)
10% is hardware and that has a PE multiple of 15
65% for Repa which also has a PE multiple of 15
25% for software revenue which has a PE multiple of 25
The weighted average of these PE ratios would be
PE ratio = 0.10*15 + 0.65*15 + 0.25*25 = 17.5
One could assign a PE ratio of 17.5 to next years net income if they think these multiples for the different businesses to be satisfactory.