PSXStock

Three Pakistani Stocks (PSX) Still Undervalued

The companies with a Discounted Cash Flow Discount (%) higher than 0 are considered undervalued companies based on the Discounted Cash Flow method. If the Discount (%) is lower than 0, then the companies are considered overvalued based on the Discounted Cash Flow method.

Here I am listing of companies in Pakistan Stock Exchange and their Score that are still undervalued.

I’ve applied the discounted cash flow to the high Predictability Rank, and calculated the intrinsic values of the companies. These companies appeared to be undervalued as measured by discounted free cash flow model. The formula and methodology are described in What worked in the market from 1998-2008? Intrinsic Value, Discounted Cash Flow and Margin of Safety.

Following are the assumptions:

  1. Discount rate of 12%.
  2. The growth rate for the next 10 years are assumed to be the same as the average growth rate of the past 10 years. If the growth rate is higher than 20%, we will use 20%. If the growth rate is lower than 5%, we will use 5%.
  3. For the terminal values, we use 4% growth rate.
  4. I used trailing twelve month Earning Per Share (ESP) TTM,  free cash flow and 10 year compound earnings.

 

Symbol

Name

Price

Valuation

Discount %

MARI

Mari Petroleum Company Ltd.

1,566.89

1,579.00

1%

PAKT

Pakistan Tobacco Company

1,598.98

1647.00

6%

RMPL

Rafhan Maize Products Co. Ltd.

10399.00

13,250.00

9%

 

The intrinsic value of the companies are calculated with: Intrinsic Value = Future Earnings at Growth Stage + Terminal Value

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