Valuation of Tri-Way Industries
What is the current value and the future value of Tri-Way?
According to the appraisal that was performed earlier this year, the enterprise value was assessed at US$340.6M. The enterprise value of Tri-Way does increase day by day, but it does not give us a fair valuation of the company as if it would be valued by the stock market.
Following Financial Assumptions for Tri-Way was presented in October 2016. However, these assumptions was made based on that financing would be in place to rapidly increase growt. The growth rate presented in the assumptions is a bit optimistic in my opinion.
I will revise the financial assumptions based on my personal expectations. I have basically cut the growth speed by 30% compared to the initial assumptions made by the company, and increased the number of outstanding shares, so the safety margin is quite high.
Since Tri-Way is a fast growing company with a very short operational history high initial capital expenditures and not paying dividends, there is only one applicable valuation model – the Benjamin Graham Valuation Formula.
According to the Graham Formulas and my assumptions, the current market value of Tri-Way industries would be $24-$26/share if Tri-Way would be listed on a major exchange today. I expect that Tri-Way will list in Hong Kong by the year 2019, which would give Tri-Way a listing price of $60-$66/share.