JMMB Group Limited Equity Report

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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