1) Total EPS
Year
|
Year
|
EPS
|
1
|
2008
|
The average EPS growth rate is 10%,and the EPS in year 2008 is RM2.20
|
2
|
2009
|
RM2.20x1.1=2.42
|
3
|
2010
|
RM2.42,1.1=2.66
|
4
|
2011
|
RM2.66x1.1=2.93
|
5
|
2012
|
RM2.93x1.1=3.22
|
6
|
2013
|
RM3.22x1.1=3.54
|
7
|
2014
|
RM3.54x1.1=3.89
|
8
|
2015
|
RM3.89x1.1=4.28
|
9
|
2016
|
RM4.28x1.1=4.71
|
10
|
2017
|
RM4.71x1.1=5.18
|
Total EPS
|
RM35.03
|
2) Let's say the average PE for the past 10 years is 13
Expected price in 2018 =
RM5.18 x 13
=
RM67.34
3) Total dividends (for the ten years)
Total dividends =
Total EPS x Average dividend payout
=
RM35.03 x 20%
=
RM7.01
4) Total returns
Total returns,R =
Expected price in 11th year + total dividend
=
RM67.34 + RM7.01
= RM74.35
5) Intrinsic value
Using equation R= ar(n-1)
R = Total returns
a = Intrinsic value of the share
r = Growth rate, let's say 15%,hence 1.15
n = Year n, in this case, the 11th year, so n= 11
Intrinsic value of the share
R = arn-1
74.35 = a 1.15 11-1
a =
RM18.38
If the current stock price is RM13, so it is worth to BUY.
Anyway, this is just 1 of the method for stock valuation,
you might refer to other method as well, happy trading:-)
