Hi Winner69 - my updated warranted price to NTA and warranted price to book analysis is below:
Attachment 13844
On a spot price to nta basis, the 'warranted' model says $4.27. But given brokers expect returns on NTA to reduce from 35.6% in FY22 to an average of 30.2% over the next 3 financial years, I did a scenario using that in the framework, and it produces a warranted price of $3.53
I think P/NTA is much more relevant that price to book given the sheer quantum of intangibles on the balance sheet. I prefer looking at net tangible operating assets.
On a pure price to book basis, the warranted price to book approach pumps out $3.12
The theory behind the warranted price to NTA/book is simple...if a book produces a return on equity of (say) 10%, and an investors cost of equity is (say) 9%, the price to book should be 1.11x (10%/9%), all else equal. The formula then adjusts for a stable growth rate that can be expected from the book - the higher the growth the higher the warranted multiple. It's a great approach for valuing banks and other financial institutions (like insurance). It's only semi relevant to TRA given its retail business is the feeder to those later two operations. But still kinda an interesting sense check. I'm confident in my cost of equity calcs but do some sensitivity tables for it and the stable growth rate that gets used. For the stable growth rate I tried to look at it like a pure financial services firm but didn't put much thought into it - hence the sensitivity table.
I note that Jarden came out with a 12m target price of $4.42 and Craigs of $4.75 over the last two days.