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You work as an Investment Analyst in a Trust fund. Your supervisor asked you to evaluate Kable Bhd, a company that is listed at Bursa Malaysia. Kable earned RM80 million after-tax profits in its latest financial year 31st October, 2021. The company paid dividends of RM18 million in 2021. You noted that its dividends have been increasing at a rate 4% a year for the past 6 years. Companies like Kable are valued by financial institutions at an average 15 PE. Shareholders' cost of equity is 10%. Kable's nominal share value is RM0.50. An excerpt of Kable's latest Statement of Financial Position is as follows: RM'000 Non-current assets 324,889 Net current assets 182.981 507,870 Paid up capital 300,000 Retained profit 159,665 459,665 Long term liabilities Term Loan 48,205 507,870 Required: You are to value Kable shares using; i. The net asset method. 3 ii. The dividend valuation method. 4 iii. The price-earnings ratio method. 3Step by Step Solution
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