SingTel – Fundamental & Intrinsic Value

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Base on latest 2009 full year financial report:

  • PE = 14.9
  • Dividend Yield = 3.87%
  • NAV = $1.39
  • Net Earning = 23.1% (26.7% in 2008)
  • Current Ratio = 0.74 (Similar industry is 0.55) 
  • ROA = 10.4% (Base on 2009 Full Year)
  • ROE = 16.8% (base on 2009 Full Year)
 
 

Stock Background

  • Historical high = about $4.10
  • Current Price = $3.23
 
  
 
 
Intrinsic Value Calculation
PE Model
  • Fair value PE = 15, intrinsic value= $3.24 (base on EPS $0.21648)
  • EPS Growth Rate = 11.3%
  • PEG = 1.32  

DCF Model
 I use Free Cash Flow instead of Net Operating Cash Flow to calculate the intrinsic value. The reason is SingTel is a telecommunication company which need to continuously invest in the networking infrastructure to generate revenue and profit constantly. The intrinsic value is $2.45.

 

 

Discounted EPS Model

  • EPS Growth Rate = 11.3%
  • Discount Rate = 5%
  • 2009A EPS = $0.21648
  • Intrinsic Value = $3.02

Regardless of which method to calculate the intrinsic value, SingTel seems to at its fair value or over value (base on Free Cash Flow DCF Model). Furthermore, the stock price moves sideway for the past 10+ years. I will not buy SingTel unless the stock price falls below $2.50 and there is an increase in dividend yield in future.

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StarHub – Fundamental & Intrinsic Value

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Base on Q2, 2009 financial report:

  • PE = 11.9
  • Dividend Yield = 8.3%
  • NAV = $0.0723
  • Net Earning = 15.1% (14.6% in 2008)
  • Current Ratio = 0.5 (Telecommunication industry characteristic, SingTel current ratio is 0.7, M1 is 0.48)
  • ROA = 18.7% (Base on 2008 Full Year)
  • ROE = 288% (base on 2008 Full Year)
  • Cash Flow = S$237.2 Million   

Stock Background

  • 3 years historal high = $3.2
  • Current Price = $2.17 (only 68% of 3 years high)

Intrinsic Value Calculation

PE Model

 

  • Fair value PE = 15, intrinsic value= $2.73 (base on EPS $0.18186)
  • PEG = 1.03

DCF Model

 

  • Growth Rate = 15.26% (capped at 15%, from 2004A to 2008A)
  • Discount Rate = 5%
  • Number of Shares = 1,711.73 million
  • 2008A Net Operating Cash Flow = S$597.5 million, intrinsic value = $5.86

Discounted EPS Model

  • Growth Rate = 11.6% (From 2005A to 2008A)
  • Discount Rate = 5%
  • 2008A EPS = $0.18186
  • Intrinsic Value = $2.58

  Intrinsic Value for StarHub (the most conservative number of the three numbers) = $2.58 (Current price is 15.9% discount to the intrinsic value!)

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General Electric (GE) – Fundamental & Intrinsic Value

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Base on latest quarter:

  • PE = 12.8
  • Dividend Yield = 4.8%
  • Net Earning = 7.5% (10.5% in 2008)
  • Current Ratio = 2.2
  • ROA = 1.64% (2.18% in 2008 Full Year)
  • ROE = 11.5% (15.7% in 2008 Full Year)

Intrinsic Value Calculation (DCF Model)

  • 10 Year Average Growth Rate = 3.9%
  • Discount Rate = 5%
  • Number of Shares = 10,393 million
  • TTM Net Operating Cash Flow = $36,064 million
  • Intrinsic Value = $32.76

Stock Background
 

  •   5 years historal high = $42.15
  • Current Price = $17.00 (only 40% of 5 years high & 48% discount to Intrinsic Value of $32.76)
The stock price is currently above 20D, 50D and 200D MA. Strong support at $14.57.

My target entry level is between $15.00 to $15.50 when the stock price retraces back to the support level.

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