Valuation Library
Value Investing Case Study 89-1: In-depth valuations of companies featured in my videos.
Welcome to the Valuation Library of Investing For Value, where I break down the numbers behind every stock I analyze. Each valuation here is a detailed follow-up to my fundamental analysis videos, providing the full calculations, assumptions, and risk factors that drive my investment conclusions.
If you have watched my videos and want to dive deeper into the “why” behind the valuation, this is the place to be.
How to Use This Library
- Watch the video first. If you have not seen the analysis yet, check out the fundamental breakdown on my blog.
- Click on a company below. Find the stock you are interested in and explore its valuation details.
- Compare and learn. Use the insights to refine your own investment strategy.
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Valuation Report
1. Aumas
I valued Aumas based on the following picture.
Aumas will deliver 16% growth in Year 1 which will reduce proportionately to 4% in the terminal year (Year 6). This 16% is the CAGR in revenue from 2020 to 2024. The base revenue would be the 2024 revenue.
The company would improve its operating efficiency so that the contribution margin in the terminal year (Year 6) would be 10 % higher than the base value. The base contribution margin was the 2021 to 2024 value.
Note that this contribution margin picture assumes that gold prices remain at the current level. In other words, the current gold price is assumed to be the long-term cyclical price.
The company would increase its Reinvestment rate so that it follows the fundamental growth equation in the terminal year. The base Reinvestment rate would be the past 10 years average.
I assumed a nominal tax rate of 24%.
On such a basis I obtained an intrinsic value of RM 0.70 per share compared to its market price of RM 0.95 per share (6 Feb 2025). There is no margin of safety.
1.1 Valuation model
I valued Aumas based on a multi-stage valuation model as shown in Table 1.
The basic equations used in the model are:
Free Cash Flow to the Firm (FCFF) = EBIT(1 – t) – Reinvestment.
EBIT = Revenue X Contribution margin – Fixed cost. The earning was based on the operating profit model shown in the left part of Chart 1.
Reinvestment was derived from the Reinvestment margin.
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| Aumas Table 1: Sample calculation Notes a. Proportionate reduction b. Pegged to growth rate c. Assumed proportionate improvement d. Assumed growth at terminal rate e. Revenue X Margin and after accounting for Fixed costs f. Assumed proportionate change g. b X f h. FCFF for each year = e - g j. Assumed constant D/E ratio. Refer to WACC table k. NPV for each year = (h X j) l. Terminal for the year discounted at terminal growth rate m. 5 years NPV + terminal value n. Inclusive of any excess TCE. Non-operating assets, MI and Debt o. Based on number of shares |
The cost of funds was based on the first page results of a Google search for “Aumas WACC”. Refer to Table 2.
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| Aumas Table 2: Estimating the cost of funds |
1.2 Risks and limitations
I consider my valuation of Aumas a reasonable one. Refer to Chart 1.
- The projected FCFF is a steady uptrend that is a bit below the projected log normal trend line.
- The projected terminal revenue is 3/4 higher than the base revenue. Given its plans to double capacity and look for new gold reserves, this may not sound unrealistic.
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| Aumas Chart 1: Projection |
The valuation model resulted in the following:
- Average 21 % ROIC compared to the 2023 to 2024 average of 14 %.
- Average RM 0.03 EPS per year compared to the 2023/24 average of RM 0.02 per share.
- Average 17 % EBIT margin compared to the 203/24 average of 27 %.
I would think that they are not unrealistic.
Is there an upside to the valuation? My valuation model is sensitive to changes in the improvement in the contribution margin
For example, if I assumed the long-term gold price increases by 25% (leading to a 25% increase in the base contribution margin), I would obtain the current market price. I will leave it to you to judge whether this gold price is reasonable.
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Disclaimer & DisclosureI am not an investment adviser, security analyst, or stockbroker. The contents are meant for educational purposes and should not be taken as any recommendation to purchase or dispose of shares in the featured companies. Investments or strategies mentioned on this website may not be suitable for you and you should have your own independent decision regarding them.
The opinions expressed here are based on information I consider reliable but I do not warrant its completeness or accuracy and should not be relied on as such.
I may have equity interests in some of the companies featured.
This blog is reader-supported. When you buy through links in the post, the blog will earn a small commission. The payment comes from the retailer and not from you.
Disclaimer & Disclosure
I am not an investment adviser, security analyst, or stockbroker. The contents are meant for educational purposes and should not be taken as any recommendation to purchase or dispose of shares in the featured companies. Investments or strategies mentioned on this website may not be suitable for you and you should have your own independent decision regarding them.
The opinions expressed here are based on information I consider reliable but I do not warrant its completeness or accuracy and should not be relied on as such.
I may have equity interests in some of the companies featured.
This blog is reader-supported. When you buy through links in the post, the blog will earn a small commission. The payment comes from the retailer and not from you.
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