I’m afraid this is rather wide of the mark, understandable given the desktop basis of the analysis.
One useful thing the author could do is simply to examine underlying profits over the last 15 years, or look at EPS while stripping out buybacks. That will tell you the story over whether there is any deep value in the company.
The past 15 years underlying profits has nothing to do with the deep value, which is based on earnings power and balance sheet, but with the process of value creation. I get the criticism on that part, this is why it is only part 1, and covered two listed businesses, and I will continue with further analysis and on the value creation.
Also stripping out buybacks is not correct and is a arbitrary choice of selecting some of the capital allocation only.
I understand your point, but I am using these as a proxy for understanding the company more deeply. For instance while deep value isn’t based on growth, it is affected by de-growth. Jardines is actually shrinking (pre disposals) and therefore will likely be on a static or downward earnings spiral over time. As such, the perceived value will actually be lower.
As an example the company’s book value, while not fraudulent, is misrepresentative and the real value somewhat lower. The ability to sustainably generate cash is also severely restricted and will likely be negative.
The point about share buybacks is again not that it affects value but that the headroom for Jardines to further create value on an EPS or BVPS basis is actually very very limited. If anything, Jardines is probably overvalued currently and certainly it is expensive on a PEG basis of some ~10x - 15x.
I’m afraid this is rather wide of the mark, understandable given the desktop basis of the analysis.
One useful thing the author could do is simply to examine underlying profits over the last 15 years, or look at EPS while stripping out buybacks. That will tell you the story over whether there is any deep value in the company.
The past 15 years underlying profits has nothing to do with the deep value, which is based on earnings power and balance sheet, but with the process of value creation. I get the criticism on that part, this is why it is only part 1, and covered two listed businesses, and I will continue with further analysis and on the value creation.
Also stripping out buybacks is not correct and is a arbitrary choice of selecting some of the capital allocation only.
I understand your point, but I am using these as a proxy for understanding the company more deeply. For instance while deep value isn’t based on growth, it is affected by de-growth. Jardines is actually shrinking (pre disposals) and therefore will likely be on a static or downward earnings spiral over time. As such, the perceived value will actually be lower.
As an example the company’s book value, while not fraudulent, is misrepresentative and the real value somewhat lower. The ability to sustainably generate cash is also severely restricted and will likely be negative.
The point about share buybacks is again not that it affects value but that the headroom for Jardines to further create value on an EPS or BVPS basis is actually very very limited. If anything, Jardines is probably overvalued currently and certainly it is expensive on a PEG basis of some ~10x - 15x.