Sorry Rawz, I just thought your comments on why you bought Tower and 2CC were asinine and with a process like that you will get yourself in a world of trouble.
On valuing OCA, one of the ways I think, which will probably be out of left field for many, would be to take the current asset base, being NTA plus the float (as roughly these are the assets who's returns fall to the equity)
I'd look how they have grown over the last 5 years and then
halve that rate going forward over the next 5 to come up with an asset base number 5 years out. I would then look at what is required to generate a 10% return from here on the current cap and convert that into a return on the asset base 5 years out and see how that looks.
Alternatively I would take the current total asset base and figure that the returns generated off those assets go two ways - to the equity and to the debt holders. I would then think about what return I want as an equity holder and figure out what the debt holders will take and then look at the returns required off the asset base to satisfy both those needs. Then I would try and think about how this looks going forwards.
Another way would be to consider the differences between NPAT, underlying earnings and comprehensive income, think what each is telling you and how they have changed over the years and pick the one which encompasses the real economic returns over time and then compare that to current market cap and form an opinion of roughly what that number looks like a few years out.
But the return on assets is very simple and
if current management cant achieve a low single digit return, then someone can. We also have example cases of what similar assets have generated and as Baa_Baa pointed out we could even consider what the assets could return in a different form of usage.
There is no point and no need to get too fancy or specific, this is the beauty of it.
This video is probably the greatest contribution I have ever made to ShareTrader
I would watch it VERY carefully a few times and take notes, really think about it.