Normalized EBIT
Above figure show that APOLLO's revenue and EBIT was in uptrend mode and it have been growth at 10Yr CAGR of 6.428% and 7.854% respectively.
I am not intend to use the average EBIT as normalized EBIT as it is a little too conservative for a growth company like APOLLO. Owing to this, I decided to use the T4Q Revenue multiply by the average EBIT margin too get the Normalized EBIT from now on. Based on this assumption, 35,911 have been selected as the Normalized EBIT.
Tax Rate
Based on the above data, the tax rate have been increasing from year to year. In order to play safe, I decided to use the standard tax rate of 25%.
Average Depreciation & Maintenace CAPEX
I am using the latest FY Depreciation - -9,451 as the depreciation figure.
The Core Business Asset / Revenue Ratio on Latest FY is 0.518. With the increase of sales of 22,198, the growth CAPEX is 13,056. However, APOLLO only spend 6,430 as total CAPEX and this make the calculation show us a negative maintenance CAPEX and this is not practical.
Thus, I decided to use 50% of the average of last 5 year CAPEX as the maintenance CAPEX, and it give me a figure of 6,085.
Intrinsic Value based on EPV
From the calcualtions, we can see that the EPV/Share is 5.155, and based on today stock price of 4.980, it provide a MOS of 3.394%
References:-
stockoperator
Good. I really like EPV model as there is No assumption.
EPV model always gives quite a minimum value and the Model itself is Margin of Safety. You can even Buy at slight premium for some stable company.
Remember MOS is an Art. Don't be too meticulous and academic about MOS.
Why is that a rule of 30% MOS? Well, does Appollo needs 30% MOS? Probably yes probably No. That is why it is an Art.
2014-08-02 13:47