As a result the intrinsic value of sappe is 1931 baht

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Sappe. As a result, the intrinsic value of Sappe is 19.31 Baht. Comparing intrinsic value 19.31 Baht and the current market price 14.30 baht as of 23 March 2020, the current market price is undervalued. Since its intrinsic value is in the range of more or less than 50% of market value, our recommendation is to buy on Sappe. (Figure138) Dividend Discount Model The diYideQd diVcRXQW mRdel iV XVed WR fiQd Whe iQWUiQVic YalXe Rf a cRmSaQ\¶V VWRck calcXlaWed b\ XViQg Whe sum of all of s WRck¶V fXWXUe diYideQd Sa\meQWV aQd diVcRXQWed back WR WheiU SUeVeQW YalXe. IW caQ Well WhaW Whe price of current stock is overvalued or undervalued. If the intrinsic value is lower than the market price, it means that the price is overvalued and the investors should not buy the stock as it is traded at a premium. On the other hand, the investors should buy the stock when it is undervalued, it means that the intrinsic value is higher than the market price. There are variables in this model include the discount rate, the required rate of return or cost of equity(Kcs), the expected dividend growth(g), long-term inflation, and dividends per share(DPS). To get the intrinsic value of the stock, the equation is calculated as follow: ࠵?࠵?࠵?࠵?࠵?࠵?࠵?࠵?࠵? ࠵?࠵?࠵?࠵?࠵? ൌ ෍ ࠵?࠵?࠵? ሺ1 ൅ ࠵?ሻ ௧ୀ1 ௧ୀ1 ࠵?࠵?࠵? 2026 ሺ1 ൅ ࠵?ሻ 7 To begin with computing the expected rate of dividend growth (Figure139) that is calculated by multiplying the return on equity (ROE) with the retention ratio (1-Dividend Payout Ratio), which resulted in the 4-year average historical growth rate of 10.12% from 2016-2019. Then, use this growth rate to find the future dividends by using the dividends of the latest year (D0) multiplied by 1+growth rate to get future dividends for each year. For the growth rate during transitional phase, beginning with 2025 at 6.02%, and decelerating further to 3.96% in 2026. With the stable growth period starting in the year 2027, the dividends are expected to grow at a constant rate or at the same rate of long-term inflation which is 1.91%. Figure 139 : Dividend Growth Rate Growth Rate Year DPS EPS Payout Ratio b (RR) ROE Growth Rate 2016 0.42 1.36 30.88% 69.12% 22.11% 15.28% 2017 0.54 1.33 40.60% 59.40% 18.82% 11.18% 2018 0.69 1.16 59.48% 40.52% 15.01% 6.08% 2019 0.66 1.32 50.00% 50.00% 15.88% 7.94% 2020-2024F 10.12% 2025F Transition Period Incremental 6.02% 2026F -4.11% 3.96% 2027F Stable Growth 1.91% SRXUce : Team¶V AQal\ViV
P a g e | 42 Figure 140 : DDM Projection Dividend Discount Model Year DPS Terminal Value (1+r)^t PV Intrinsic Value 2019 0.659805 12.11869836 2020 0.726583 1.1003 0.6603500362 2021 0.800120 1.21066009 0.6608955227 2022 0.881099 1.332089297 0.6614414598 2023 0.970274 1.465697854 0.6619878478 2024 1.068475 1.612707348 0.6625346872 2025 1.132748 1.774461895 0.6383614471 2026 1.177636 14.77990851 1.952440423 8.173127356 2027 1.200129 SRXUce : Team¶V AQal\ViV After we get the expected dividends per share for each year then divide them by (1+r)^t, with cost of equity aV U iQ RUdeU WR fiQd Whe SUeVeQW YalXe Rf SAPPE¶V fRUecaVWed VWRck UeWXUQV dXUiQg Whe ERP aQd WUaQViWiRQal ShaVe. The WeUmiQal YalXe iV cRmSXWed b\ XViQg GRUdRQ¶V GURZWh MRdel, ZiWh cRVW Rf eTXiW\ aV Whe diVcRXQW rate and long-term inflation as the stable growth rate. After that we sum this terminal value (14.7799 THB) with the expected dividends per share in the year 2026 (1.1776 THB) and divide it by (1+ cost of equity) ^7 to discount it back to 2019. To end with summation of all present value of future cash flows including

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