The Hour Glass

[dydx]

Valuing THG by pegging it to a historical PER of 15x using the latest FY22's EPS of $0.2234 would give $3.35. Against the last done at $2.37, that means there is still a price gap of 41%. Is this valuation realistic? To be more accurate, we should adjust the reported FY22's net profit of $154.7m by adding back the $6.6m of accounting impairment loss. Since the number of outstanding issued shares has been falling steadily because of the persistent share buybacks, we should consider using the latest (as at 27May22) number which is a reduced 676.95m shares. Using the adjusted net profit of $161.3m and the latest outstanding issued shares of 676.95m, we would get a higher adjusted EPS of $0.238. Pegging this to a PER of 15x, we would get a higher valuation of $3.57. If we assume FY23's earnings going up by just 5%, we will get a prospective EPS of $0.25. Using the same valuation of $3.57, this would also mean we are pegging it at a prospective PER of 14.3x. Still realistic?

The above number crunching are for those who believe more in numbers. Does Dr Henry Tay think and value the business along the same number logic? Probably not entirely. Since the Tay Family now holds a 70% interest, the best valuation may be just what Dr Henry Tay is willing to sell the family's stake for. Since the business and earnings are now so attractive, any deal on the Tay Family's 70% interest will likely be with a very reputable buyer and at a princely sum.