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Added 5 months ago

Source    Company    Emeco
Current Price    $0.99    Yahoo finance
PE Ratio    3.84    Yahoo finance
Div    $0.00    Expect dividend to be announced shortly after covenant was lifted from debt providers
Div Yield    0.00%    
P/OCF    3.02    
Fair Val Est St George    $1.08    
ROE    23%    Yahoo finance  
BV yr finish    $0.65      
Average change in BV    0.3    BV per share has been growing at an average rate greater than 50% for the last 4 years. Will use a conservative 30% for this measure
Dividend 10yrs        
Div growth rate    0.00%    
Discount rate    10.00%    
DCF Divs10    $0.00    
BV10    $8.96    
NPV BV10    $3.45    
Intrinsic V    $3.45    
High margin of safety    1    High margin of safety compared to DCF. Very fast growing business
Probable outcomes    1    Bankrupt - 10%
        Slow growth or buyout - 20%
        High growth - 70%
Competitive advantage    1    Competitive advantage in strong management of asset investment, and competitive advantage in servicing assets and can therefore provide equipment at lower rents to customers. Also have value add asset performance metrics for customers.
Low leverage    1    Manageable level of debt and strong history of reducing this debt to reduce risk and increase profitability
Strong Management    0    Appear to have strong management, have managed the business well over the last 5 years bringing it back from the brink. But need to see continued reduction of debt and share buyback
Circle of competence    1    Opportunity to learn more by reading their annual reports - Large provider of mining plant to miners on the eastern and western seaboards of aus. Also have what appears to be skilled labour hire. Also have a maintenance arm that services equipment at lower cost then how they could otherwise maintain assets
Low Risk High Uncertainty    1    High uncertainty business due to impacts of covid19 on revenue and due to debt, but in the long run this business will thrive as their product mix diversifies and shifts reliance on coal. Business is demonstrating continued growth
Qualitative Score    85.71%    
Based on this intrinsic value and other valuation measures, this share is undervalued and has large margin of safey. Should be sold once reaches intrinsic value, or if dividend yield eventually proves strong, can hold onto business for long run

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