Platinum Market's ‘Deep' Tightness Shows Little Sign of Relief
Following a record rally last month, spot prices have soared to fresh all-time highs and the implied cost of borrowing the metal for one month has hit the steepest level in data going back to 2002. The inflow of platinum into facilities linked to the New York Mercantile Exchange on Thursday was the second-highest on record.
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Yahoo
5 minutes ago
- Yahoo
Is There An Opportunity With China Aviation Oil (Singapore) Corporation Ltd's (SGX:G92) 48% Undervaluation?
Key Insights The projected fair value for China Aviation Oil (Singapore) is S$2.26 based on 2 Stage Free Cash Flow to Equity China Aviation Oil (Singapore) is estimated to be 48% undervalued based on current share price of S$1.18 Industry average discount to fair value of 65% suggests China Aviation Oil (Singapore)'s peers are currently trading at a higher discount How far off is China Aviation Oil (Singapore) Corporation Ltd (SGX:G92) from its intrinsic value? Using the most recent financial data, we'll take a look at whether the stock is fairly priced by projecting its future cash flows and then discounting them to today's value. One way to achieve this is by employing the Discounted Cash Flow (DCF) model. There's really not all that much to it, even though it might appear quite complex. We generally believe that a company's value is the present value of all of the cash it will generate in the future. However, a DCF is just one valuation metric among many, and it is not without flaws. If you want to learn more about discounted cash flow, the rationale behind this calculation can be read in detail in the Simply Wall St analysis model. We've found 21 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free. The Method We are going to use a two-stage DCF model, which, as the name states, takes into account two stages of growth. The first stage is generally a higher growth period which levels off heading towards the terminal value, captured in the second 'steady growth' period. In the first stage we need to estimate the cash flows to the business over the next ten years. Where possible we use analyst estimates, but when these aren't available we extrapolate the previous free cash flow (FCF) from the last estimate or reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. We do this to reflect that growth tends to slow more in the early years than it does in later years. Generally we assume that a dollar today is more valuable than a dollar in the future, so we need to discount the sum of these future cash flows to arrive at a present value estimate: 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Levered FCF ($, Millions) US$68.2m US$72.8m US$66.6m US$63.1m US$61.2m US$60.3m US$60.2m US$60.5m US$61.1m US$62.0m Growth Rate Estimate Source Analyst x1 Analyst x1 Est @ -8.55% Est @ -5.27% Est @ -2.98% Est @ -1.38% Est @ -0.26% Est @ 0.53% Est @ 1.08% Est @ 1.46% Present Value ($, Millions) Discounted @ 5.8% US$64.5 US$65.0 US$56.2 US$50.3 US$46.1 US$43.0 US$40.5 US$38.5 US$36.7 US$35.2 ("Est" = FCF growth rate estimated by Simply Wall St)Present Value of 10-year Cash Flow (PVCF) = US$476m We now need to calculate the Terminal Value, which accounts for all the future cash flows after this ten year period. The Gordon Growth formula is used to calculate Terminal Value at a future annual growth rate equal to the 5-year average of the 10-year government bond yield of 2.4%. We discount the terminal cash flows to today's value at a cost of equity of 5.8%. Terminal Value (TV)= FCF2035 × (1 + g) ÷ (r – g) = US$62m× (1 + 2.4%) ÷ (5.8%– 2.4%) = US$1.8b Present Value of Terminal Value (PVTV)= TV / (1 + r)10= US$1.8b÷ ( 1 + 5.8%)10= US$1.0b The total value, or equity value, is then the sum of the present value of the future cash flows, which in this case is US$1.5b. To get the intrinsic value per share, we divide this by the total number of shares outstanding. Relative to the current share price of S$1.2, the company appears quite good value at a 48% discount to where the stock price trades currently. Valuations are imprecise instruments though, rather like a telescope - move a few degrees and end up in a different galaxy. Do keep this in mind. Important Assumptions We would point out that the most important inputs to a discounted cash flow are the discount rate and of course the actual cash flows. If you don't agree with these result, have a go at the calculation yourself and play with the assumptions. The DCF also does not consider the possible cyclicality of an industry, or a company's future capital requirements, so it does not give a full picture of a company's potential performance. Given that we are looking at China Aviation Oil (Singapore) as potential shareholders, the cost of equity is used as the discount rate, rather than the cost of capital (or weighted average cost of capital, WACC) which accounts for debt. In this calculation we've used 5.8%, which is based on a levered beta of 0.800. Beta is a measure of a stock's volatility, compared to the market as a whole. We get our beta from the industry average beta of globally comparable companies, with an imposed limit between 0.8 and 2.0, which is a reasonable range for a stable business. Check out our latest analysis for China Aviation Oil (Singapore) SWOT Analysis for China Aviation Oil (Singapore) Strength Earnings growth over the past year exceeded the industry. Currently debt free. Dividends are covered by earnings and cash flows. Weakness Dividend is low compared to the top 25% of dividend payers in the Oil and Gas market. Opportunity Annual revenue is forecast to grow faster than the Singaporean market. Trading below our estimate of fair value by more than 20%. Threat No apparent threats visible for G92. Looking Ahead: Although the valuation of a company is important, it ideally won't be the sole piece of analysis you scrutinize for a company. The DCF model is not a perfect stock valuation tool. Preferably you'd apply different cases and assumptions and see how they would impact the company's valuation. For instance, if the terminal value growth rate is adjusted slightly, it can dramatically alter the overall result. Why is the intrinsic value higher than the current share price? For China Aviation Oil (Singapore), we've compiled three relevant factors you should consider: Risks: For instance, we've identified 1 warning sign for China Aviation Oil (Singapore) that you should be aware of. Future Earnings: How does G92's growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with our free analyst growth expectation chart. Other High Quality Alternatives: Do you like a good all-rounder? Explore our interactive list of high quality stocks to get an idea of what else is out there you may be missing! PS. Simply Wall St updates its DCF calculation for every Singaporean stock every day, so if you want to find the intrinsic value of any other stock just search here. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Sign in to access your portfolio
Yahoo
35 minutes ago
- Yahoo
Mag 7 earnings, Fed meeting, PCE, jobs report: What to Watch
Market Domination Overtime host Josh Lipton goes over the biggest stories for investors to watch next week, starting Tuesday, July 29. Plenty of fresh earnings reports are on tap, with results posted from UnitedHealth (UNH) and Starbucks (SBUX) on Tuesday, Microsoft (MSFT) and Meta (META) on Wednesday, and Apple (AAPL) and Amazon (AMZN) on Thursday, among others. The Federal Reserve's July meeting kicks off on Tuesday and concludes on Wednesday with the FOMC's interest rate decision. Tune in to Yahoo Finance at 2 p.m. on Wednesday, July 30 for coverage of the event. June Personal Consumption Expenditures (PCE) data will be published on Thursday morning, and the July Jobs Report will be published on Friday morning. To watch more expert insights and analysis on the latest market action, check out more Market Domination Overtime here. Related videos The £70bn pension tax raid Reeves may not be able to resist NS&I 'bucks trend' by launching one-year bonds with higher rates Billionaire Bill Ackman has over 20% of his FTSE 100 fund in this one stock The inheritance tax rule that could cut your bill to £0 Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
35 minutes ago
- Yahoo
S&P 500, Nasdaq close at records; Deckers soars on UGG demand
By Noel Randewich (Reuters) -The S&P 500 and Nasdaq notched record high closes on Friday, lifted by optimism the U.S. could soon reach a trade deal with the European Union, while Deckers Outdoor surged following a strong quarter for the maker of UGG boots and Hoka sneakers. European Commission President Ursula von der Leyen will meet U.S. President Donald Trump on Sunday in Scotland after EU officials and diplomats said they expected to reach a framework trade deal this weekend. Trump said earlier that the odds of a U.S.-EU trade deal were "50-50". Deckers Outdoor soared 11% after results beat quarterly estimates, with strong demand in international markets. Intel tumbled 8.5% after the chipmaker forecast steeper quarterly losses than expected and announced plans to slash jobs. Wall Street has surged to record highs in recent weeks, thanks to upbeat quarterly earnings, trade deals with Japan and the Philippines, and expectations that the White House will cement more agreements to avoid elevated tariffs threatened by Trump. "The market has been anticipating that the deals are going to get done," said Thomas Martin, Senior Portfolio Manager at GLOBALT in Atlanta. "Personally, I have a bit more skepticism. You've got to be careful, because if they don't get done, there is more room for disappointment than there is upside." The S&P 500 climbed 0.40% to end the session at 6,388.64 points. The Nasdaq gained 0.24% to 21,108.32 points, while the Dow Jones Industrial Average rose 0.47% to 44,901.92 points. Nine of the 11 S&P 500 sector indexes rose, led by materials, up 1.17%, followed by a 0.98% gain in industrials. For the week, the S&P 500 climbed 1.5%, the Nasdaq added 1% and the Dow rose 1.3%. The S&P 500 set a closing record every day this week. The last time the index had a "perfect week" of closing highs, Monday through Friday, was in November 2021, according to Howard Silverblatt, senior index analyst at S&P Dow Jones Indices. Investors next week will focus on the U.S. Federal Reserve, with policymakers on Thursday expected to hold interest rates steady as the central bank weighs the impact of tariffs on inflation. Traders see about a 60% chance of a rate cut in September, according to CME's FedWatch tool. Trump said on Friday he believed that Fed Chair Jerome Powell might be ready to lower rates. Trump made a rare visit to the Fed on Thursday after calling Powell a "numbskull" earlier in the week for failing to slash rates. Charter Communications slumped 18% after the cable giant reported a deeper-than-expected broadband subscriber loss, hurt by competition from wireless carriers bundling high-speed internet services with 5G mobile plans. Paramount Global dipped 1.6% after U.S. regulators approved its $8.4-billion merger with Skydance Media. Health insurer Centene rose 6.1% after it said it expects to deliver improved profitability in its three government-backed healthcare insurance businesses in 2026. S&P 500 companies are expected on average to increase their second-quarter earnings by 7.7% year over year, according to LSEG I/B/E/S, with most of those gains coming from heavyweight tech-related companies. Companies reporting next week include Microsoft, Apple, Amazon and Meta Platforms. Advancing issues outnumbered falling ones within the S&P 500 by a two-to-one ratio. The S&P 500 posted 45 new highs and 6 new lows; the Nasdaq recorded 68 new highs and 54 new lows. Volume on U.S. exchanges was relatively light, with 17.7 billion shares traded, compared to an average of 18.1 billion shares over the previous 20 sessions.
