Calculating The Intrinsic Value Of Stamford Tyres Corporation Limited (SGX:S29)

Simply Wall St.12-15

Key Insights Stamford Tyres' estimated fair value is S$0.27 based on Dividend Discount Model Current share price of S$0.23 suggests Stamford Tyres is potentially trading close to its fair value ...

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overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nCalculating The Intrinsic Value Of Stamford Tyres Corporation Limited (SGX:S29)\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-12-15 10:56 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://finance.yahoo.com/news/calculating-intrinsic-value-stamford-tyres-025656933.html><strong>Simply Wall St.</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Key Insights\n\n Stamford Tyres' estimated fair value is S$0.27 based on Dividend Discount Model \n Current share price of S$0.23 suggests Stamford Tyres is potentially trading close to its fair value \n ...</p>\n\n<a href=\"https://finance.yahoo.com/news/calculating-intrinsic-value-stamford-tyres-025656933.html\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"DCF","symbol_name":"Dreyfus Alcentra Global Credit Income 2024 Target Term Fund, Inc","start_time":0,"source_url":"https://finance.yahoo.com/news/calculating-intrinsic-value-stamford-tyres-025656933.html","article_id":"2491436565","we_media_id":null,"thumbnails":["https://s.yimg.com/uu/api/res/1.2/eLcg9wYqosjpnvzu7qQIjQ--~B/aD00MzI7dz0xMTk0O2FwcGlkPXl0YWNoeW9u/https://media.zenfs.com/en/simply_wall_st__316/618e6fc7283f3230bbd917de1ca111f2"],"rights":{"source":"yahoofinance_sg","url":"https://finance.yahoo.com/news/calculating-intrinsic-value-stamford-tyres-025656933.html","rn_cache_url":null,"customStyle":"","selectors":"article, body","filters":"","directOrigin":true},"url":"https://stock-news.laohu8.com/highlight/detail?id=2491436565","pubTimestamp":1734231416,"columns":[],"sourceInfo":{"source_id":"yahoofinance_sg","name":"Yahoo Finance"},"weMediaInfo":null,"summary":"Stamford Tyres' estimated fair value is S$0.27 based on Dividend Discount Model. Current share price of S$0.23 suggests Stamford Tyres is potentially trading close to its fair value. Stamford Tyres' peers seem to be trading at a higher discount to fair value based onthe industry average of 31%. Now the most important inputs to a discounted cash flow are the discount rate, and of course, the actual cash flows. Part of investing is coming up with your own evaluation of a company's future performance, so try the calculation yourself and check your own assumptions. The DCF also does not consider the possible cyclicality of an industry, or a company's future capital requirements, so it does not give a full picture of a company's potential performance. Given that we are looking at Stamford Tyres as potential shareholders, the cost of equity is used as the discount rate, rather than the cost of capital  which accounts for debt","collect":0,"end_time":0,"defaultTopTitle":"yahoo.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"DCF":"Dreyfus Alcentra Global Credit Income 2024 Target Term Fund, Inc","BK6517":"汽车股","S29.SI":"添福胶胎","BK6071":"经销商"},"translate_title":"计算斯坦福轮胎有限公司（新交所代码：S29）的内在价值","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"DCF":1,"S29.SI":0.9},"content_text":"Key Insights\n\n Stamford Tyres' estimated fair value is S$0.27 based on Dividend Discount Model \n Current share price of S$0.23 suggests Stamford Tyres is potentially trading close to its fair value \n Stamford Tyres' peers seem to be trading at a higher discount to fair value based onthe industry average of 31% \n\n Today we will run through one way of estimating the intrinsic value of Stamford Tyres Corporation Limited (SGX:S29) by taking the expected future cash flows and discounting them to today's value. We will take advantage of the Discounted Cash Flow (DCF) model for this purpose. There's really not all that much to it, even though it might appear quite complex. \n We generally believe that a company's value is the present value of all of the cash it will generate in the future. However, a DCF is just one valuation metric among many, and it is not without flaws. If you still have some burning questions about this type of valuation, take a look at the Simply Wall St analysis model. \n View our latest analysis for Stamford Tyres \n Is Stamford Tyres Fairly Valued? \n As Stamford Tyres operates in the retail distributors sector, we need to calculate the intrinsic value slightly differently. Instead of using free cash flows, which are hard to estimate and often not reported by analysts in this industry, dividends per share (DPS) payments are used. Unless a company pays out the majority of its FCF as a dividend, this method will typically underestimate the value of the stock. We use the Gordon Growth Model, which assumes dividend will grow into perpetuity at a rate that can be sustained. The dividend is expected to grow at an annual growth rate equal to the 5-year average of the 10-year government bond yield of 2.2%. We then discount this figure to today's value at a cost of equity of 6.6%. Compared to the current share price of S$0.2, the company appears about fair value at a 16% discount to where the stock price trades currently. The assumptions in any calculation have a big impact on the valuation, so it is better to view this as a rough estimate, not precise down to the last cent. \nValue Per Share = Expected Dividend Per Share / (Discount Rate - Perpetual Growth Rate)\n= S$0.01 / (6.6% – 2.2%)\n= S$0.3\n\n\n\n  SGX:S29 Discounted Cash Flow December 15th 2024\n \n\n Important Assumptions \n Now the most important inputs to a discounted cash flow are the discount rate, and of course, the actual cash flows. Part of investing is coming up with your own evaluation of a company's future performance, so try the calculation yourself and check your own assumptions. The DCF also does not consider the possible cyclicality of an industry, or a company's future capital requirements, so it does not give a full picture of a company's potential performance. Given that we are looking at Stamford Tyres as potential shareholders, the cost of equity is used as the discount rate, rather than the cost of capital (or weighted average cost of capital, WACC) which accounts for debt. In this calculation we've used 6.6%, which is based on a levered beta of 1.059. Beta is a measure of a stock's volatility, compared to the market as a whole. We get our beta from the industry average beta of globally comparable companies, with an imposed limit between 0.8 and 2.0, which is a reasonable range for a stable business. \nSWOT Analysis for Stamford Tyres\n\n\nStrength\n\nEarnings growth over the past year exceeded the industry.\n\n\nDebt is well covered by .\n\n\nDividend is in the top 25% of dividend payers in the market.\n\n\nDividend information for S29.\n\n\n\nWeakness\n\nEarnings growth over the past year is below its 5-year average.\n\n\nInterest payments on debt are not well covered.\n\n\n\nOpportunity\n\n Current share price is below our estimate of fair value.\n\n\n Significant insider buying over the past 3 months.\n\n\nLack of analyst coverage makes it difficult to determine S29's earnings prospects.\n\n\n\nThreat\n\nDebt is not well covered by operating cash flow.\n\n\nPaying a dividend but company has no free cash flows.\n\n\nIs S29 well equipped to handle threats?\n\n\n\n Looking Ahead: \n Valuation is only one side of the coin in terms of building your investment thesis, and it shouldn't be the only metric you look at when researching a company. The DCF model is not a perfect stock valuation tool. Rather it should be seen as a guide to \"what assumptions need to be true for this stock to be under/overvalued?\" If a company grows at a different rate, or if its cost of equity or risk free rate changes sharply, the output can look very different. For Stamford Tyres, we've compiled three pertinent elements you should assess: \n\n Risks: Every company has them, and we've spotted   4 warning signs for Stamford Tyres   (of which 1 shouldn't be ignored!) you should know about. \nManagement:Have insiders been ramping up their shares to take advantage of the market's sentiment for S29's future outlook? Check out our management and board analysis with insights on CEO compensation and governance factors.\n Other Solid Businesses: Low debt, high returns on equity and good past performance are fundamental to a strong business. Why not explore our interactive list of stocks with solid business fundamentals to see if there are other companies you may not have considered! \n\n PS. The Simply Wall St app conducts a discounted cash flow valuation for every stock on the SGX every day. If you want to find the calculation for other stocks just search here.\nHave feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.3","shortVersion":"4.29.3","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2491436565"}