Valuation Case Study on Asiasons Capital Limited 1 Disclaimer and - - PowerPoint PPT Presentation

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Valuation Case Study on Asiasons Capital Limited 1 Disclaimer and - - PowerPoint PPT Presentation

Apr 08, 2023 269 likes •460 views

Valuation Case Study on Asiasons Capital Limited 1 Disclaimer and Declaration The objective of the presentation is for educational purposes. The full content of the presentation is for illustration purposes only and should not be used as

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Valuation Case Study on Asiasons Capital Limited

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Disclaimer and Declaration

The objective of the presentation is for educational purposes. The full content of the presentation is for illustration purposes only and should not be used as investment

  • recommendations. AB Maximus and its presenters are not

responsible for all investment activities conducted by the participants and cannot be held liable for any investment loss. The company and presenters may have personal interest in the particular shares presented.

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Agenda

Company Background 1 Industry Overview 2 Valuation 3 Risk 4

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Company Background

Asiasons Capital Limited is a private equity firm listed on SGX Mainboard since 2010 focusing on alternative investment

  • pportunities in Emerging East Asia.

Source: Company reports

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Company Background

Investment Management Division

  • Setting up private equity vehicles focusing on

the consumer and resources sector.

  • Latest fund is called Dragonrider Opportunity

Fund II L.P. (“DOFII”) focusing on acquisitions in the television, entertainment, and food & beverage (F&B) sectors.

  • F&B franchises include T.G.I. Friday’s,

Applebees restaurants, etc.

Source: Company’s Annual Report 2012

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Company Background

Financial Advisory Division

  • Focus on providing M&A advisory, and

investment banking services.

  • Underwriting IPOs.

Source: Company’s Annual Report 2013

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Company Background

Revenue growth (FY 2012 vs. FY 2011)

Source: Company’s Annual Report 2012 5,600 5,700 5,800 5,900 6,000 6,100 6,200 6,300 6,400 FY 2011 FY 2012

Revenue ($'000s)

Revenue ($'000s)

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Company Background

Net profit growth (FY 2012 vs. FY 2011)

Source: Company’s Annual Report 2012 5,000 10,000 15,000 20,000 25,000 30,000 35,000 FY 2011 FY 2012

Net profit ($'000)

Net profit ($'000)

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Industry Overview

Asean 4 (Indonesia, Malaysia, Thailand, and Philippines_ expected consumption growth rates of 5.0 – 6.5% over next 5 to 10 years.  Increasingly young and urban population in these countries who have varied interests towards entertainment and fashion. Growth in disposable income and corresponding discretionary spending.

Source: Company Annual Report 2012

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Industry Overview

 Investors, retail and institution, are able to invest in a public-listed private equity firm without facing the high investment barriers, ie. the 2.0% management fee/ 20.0% performance fee (2/20) associated with many PE firms. Year-to-date (YTD) track record of achieving approx. 38.0% Internal rate of return (IRR).

Source: Company Annual Report 2012

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Valuation

Methodology

  • Discounted cash flow (DCF) for private equity industry using

WACC (%) of 7.0%; 5-year time horizon; growth of 5.0% in first year and second year, 6.0% in third year, 2.0% terminal growth rate (Year T+1).

  • Beta obtained from Reuters.com was 0.12, compared to

average industry beta of 0.96.

  • Growth drivers include potential acquisitions of entertainment

and F&B assets, savvy youth market, growing private equity interest in South-East Asia.

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Valuation

Risk Free Rate 3.1% Market Required Return 10.0% Beta 0.12 Cost of Equity (CAPM) 4.0% Cost of Debt 7.6% WACC + small company bias 7.0% Equity Market Risk Premium 7.5%

Source: Reuters.com and Company Reports

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Valuation

Investment Management Division

  • Continued expansion into regional markets in South

East Asia seeking profitable private-equity

  • pportunities.
  • Focus on growth opportunities in the entertainment

and F&B sector.

  • Tap into the growing affluence of Asian consumers

who are constantly keeping up with new trends.

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Valuation

 Financial Advisory Division

  • Acquisition of 32.6% indirect interest in the issued

share capital of Asiasons WFG Capital Pte. Ltd. allows the Group to tap into the corporate advisory services

  • market. (Transaction completed on Jan 04, 2013)
  • Expectations of an increment in IPOs in the Asian

region, and underwriting services are likely to be in demand.

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Valuation

2013F 2014F 2015F 2016F 2017F FCFF ($’000) $33,962 $33,318 $32,997 $32,063 $30,856 Terminal Value (FCFF2018/r) $1,550,236 FCFF $33,962 $33,318 $32,997 $32,063 $1,581,092 NPV ($’000) $1,713,433 Minus Debt $7,874 Add Cash $12,245 FCFF due to share holders $1,717,803

  • no. of shares

(‘000) 997,760 Fair Value per Share SGD 1.75

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Trading Data

52 Weeks Trading Range $0.52 - $0.99 Avg Volume (3 mths) 9.7 mil Market Cap $930.8 mil

Source: Reuters.com

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Main Risks

Valuation assumes that the pace of investment growth remains stable, and less volatile financial markets in the next year or so. Entertainment and F&B assets do not display any material impairments going forward.

  • Movie Media/Entertainment industry.
  • F&B expansion through its SGX-listed subsidiary

Chaswood Resources.

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Main Risks

Default Risk – Low (As of end FY 2012)

  • Current ratio = 5.2x
  • Interest coverage = 29.6 x
  • D/E ratio = 0.0
  • Revolving credit facilities utilized as of 1Q13 = $7.4 mil
  • Cash as of end 1Q13 = $11.3 mil

Source: Company reports