valuation?, page-8

resourceboom

Good spot.

1. $73.4 is my 30 June 11 estimate of equity, stripping out some things that don't reflect the underlying business (such as the acquisition accounting when the business was backdoor listed, retained losses from the previous debt collection business etc). To calculate this, I started with the FY06 accounts for the underlying business and worked forward - timeconsuming process!
2. Payout ratio is largely irrelevant, given the marginal return on equity above my 12% required rate, but my $0.45 cent valuation for FY11 assumes 100% of earnings reinvested. (BTW - my valuation goes to $0.52 in FY12 and $0.61 in FY13).
3. I have ignored tax losses. In particular, I have used RBS Morgans' NPAT estimates for FY11, FY12 and FY13 but adjusted them as if tax was payable at 30% - although this ignores some of the tax loss value in RQL, I think it is a better measure of the company's real earning power in future years and obviously more conservative.
4. I believe the RBSM forecasts for FY11, FY12 and FY12 make assumptions re DSA's contribution, so yes, that is effectively included in my calcs.
5. As I mentioned in 3, I have used RBSM's estimates which is for NPBT of $11.8 in FY11, $17.4 in FY12 and $21.9 in FY13. For the purpose of calculating the equity each year, I have assumed full reinvestment of all earnings (in this case, excluding tax effect).

I agree that this is a great growth story, but I am concerned that the constant need to replenish capital acts as something of a heavy anchor on this boat.