$CEB Recent Results
In reviewing the recent earnings report, it’s clear that the results fell short of expectations. The topline came in 18% below consensus estimates, and the bottom line missed by 15%. This shortfall can be attributed to a combination of higher administrative, distribution, and other expenses, alongside an elevated tax rate.
As a result, we must reconcile ourselves to a lower earnings trajectory, with the annualized earnings for FY24 projected to be around RM60 million.
With this in mind, our next step is to determine an appropriate forward P/E ratio. As humans, we inherently seek comparables to anchor our valuations. Historically, $ATAIMS (8176.MY)$ even in favorable conditions, never traded below 7x earnings, with an average closer to 17x. Meanwhile, $CEB (5311.MY)$ , in the early days following its IPO, commanded valuations north of 20x, though it currently trades at 5.7x, with an average of 16.5x.
Given these benchmarks, a fair valuation for $CEB (5311.MY)$ would reasonably exceed 10x earnings. If one subscribes to the concept of mean reversion, a 16.5x multiple suggests a fair value of approximately RM1.00. However, for the more risk-averse investor, a more conservative estimate might place fair value closer to RM0.60.
Ultimately, the appropriate valuation hinges on one’s tolerance for risk and belief in the company’s ability to revert to historical norms.
As a result, we must reconcile ourselves to a lower earnings trajectory, with the annualized earnings for FY24 projected to be around RM60 million.
With this in mind, our next step is to determine an appropriate forward P/E ratio. As humans, we inherently seek comparables to anchor our valuations. Historically, $ATAIMS (8176.MY)$ even in favorable conditions, never traded below 7x earnings, with an average closer to 17x. Meanwhile, $CEB (5311.MY)$ , in the early days following its IPO, commanded valuations north of 20x, though it currently trades at 5.7x, with an average of 16.5x.
Given these benchmarks, a fair valuation for $CEB (5311.MY)$ would reasonably exceed 10x earnings. If one subscribes to the concept of mean reversion, a 16.5x multiple suggests a fair value of approximately RM1.00. However, for the more risk-averse investor, a more conservative estimate might place fair value closer to RM0.60.
Ultimately, the appropriate valuation hinges on one’s tolerance for risk and belief in the company’s ability to revert to historical norms.
TLDR : The company has a dirt-cheap valuation despite lower earnings. Fair value range from RM0.60 to RM1.00.
Disclaimer: The above reflects an opinion based on current information and should not be taken as financial advice. Investors are encouraged to conduct their own research and consider their risk tolerance before making any investment decisions.
Disclaimer: Community is offered by Moomoo Technologies Inc. and is for educational purposes only.
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