The prevailing inflationary environment has affected the valuation of listed property firm
Inflationary pressures have affected several entities, but -- all things being equal -- the property sector is usually regarded a hedge in instances of economic volatility.
But the local property market seems not to have been spared.
Analysts say the classic discounted cash flow (DCF) analysis is a method of valuing a project, company, or asset using the concepts of the time value of money has meant that
"The intrinsic valuation of
"Under the current economic environment, we have observed that the loss of currency value has resulted in a general heavy discount of the company's profitability in real currency terms and subsequent free cash flows to the firm, which is the general starting point for intrinsic valuations," said analysts at Akribos Research Services.
The prevailing difficult operating environment is also expected to negatively affect the company's numbers in the interim.
"Secondly, the volatility in the market combined with associated inflation and country risk premiums results in a significantly higher discount rate that heavily discounts the company's bottom-line.
"Added to that, there are questions that arise over the inflation adjusted numbers which make use of an inflation index that is viewed as too conservative in tracking actual price movements.
One of its big projects in the capital is the proposed conversion of Charter House into a hotel property.
The analysts however, maintain that investors can benefit from anticipated strong upside in the value of the property firm's stock.
"Notwithstanding the aforementioned our discounted cash-flow valuation of
"However, we believe that the current scenario is temporary and that the current valuation would need to be revised when a more stable environment prevails under which an appropriate discount rate and reliable financial statement numbers are obtained.
"We additionally valued the company using relative valuation methodologies and arrived at a valuation price of
For its first quarter to
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