It is indeed difficult to find the value based on the equation, if $X 2016 is 400, find its FV.
Technically, Xurpas Inc (PSE:X) is in a strong downtrend.
I was not able to post the chart on March 30 which bounced from its strong resistance from the upper trendline.
The lower trend-line was broken. As of this writing, the bearish trend is still strong as shown in ADX. Midterm trend is also bearish. The support at 9.51which was located at 38.2% fibonacci retracement was already broken. Let’s see if the price action will revisit the low on Dec 15, 2014 at 7.42.
The Company in its disclosure at PSE has informed the investing public that there is no modification in its implementation of its Business Plan. It was clarified that X will be able to achieve a revenue of P400M in 2016.
Are you familiar with the equation, if $X is 400, find its FV 😀
Xurpas net income 2014 was 48.62% of the total revenue or 190.7M. At the current price of 8.58, with EPS of 0.11087, P/E is too high at 77.38.
With forecast revenue of P400M in 2016, assuming that the Company would be able to maintain a net income of 48.62% of the revenue for purposes of calculating an estimated fair value. Using the current market price, forward P/E 2016 is still high at 75.30. We expect that $X market price will return to its intrinsic value.
Therefore, what is X intrinsic value or FV? Xurpas has an IPO of 4.19 which was a P/E of 36, with the same price to earning multiple, net income of at least P388M or an EPS of 0.226 should be expected in 2016 instead of P400M revenue.
The news report that “Xurpas is on track with its P379-million net income guidance this year on the back of its aggressive Southeast Asia expansion” was denied by Management.
However, Management in a disclosure confirmed that a forecast of P400M revenue is attainable.
This is just a simple calculation.
How about if we do a valuation using discounted cash flows if X 2016 is 400, what is the FV?