Valuation Summary
To determine a fair value for JMMBGL, a 5-year dividend discount and a Price toEarnings (P/E) valuation methods were used.
Dividend Discount Model (DDM)
Our dividend discount model utilized a dividend payout ratio of 21.1% coupled with our estimate of the Group’s earnings over the 5-year forecast period. We determined a cost of equity of 9.65%. Our long-term growth rate was determined using the sustainable growth rate formula to arrive at 6.48%. Using these assumptions, we arrived at an intrinsic value per share of $39.98.
Price to Earnings Value (P/E)
Our dividend discount model was coupled with a P/E valuation approach. We estimated a FY2022 earnings per share of $5.04. Our P/E multiple was determined using the harmonic mean of the Group’s P/E multiple over a 4-year historical period from 2018 to 2021. The average multiple determined was 10.74x; resulting in an intrinsic value per share of $54.15.
Fair Value
Averaging both values results in our fair value estimate for the stock of $47.07. This represents an upside of 24.92% relative to the July 5, 2021 close price of $37.68 and underpins our OVERWEIGHT recommendation.
| Stock | JMMB Group Limited |
| Close Price (J$) | $37.68 |
| Estimated Fair Value (J$) | $47.07 |
| Potential Upside | 24.92% |
| Dividend Yield | 0.66% |
| Total Return | 25.58% |
| Year To Date Return | 8.62% |
| Trailing P/B | 1.24x |
| Trailing P/E | 9.81x |
| Forward P/E | 7.47x |
| Recommendation | OVERWEIGHT |
As at July 5, 2021
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