The most recent financial statements of the company are given below:

Statement of financial position (balance sheet) as at 31 January of Current Year (Year 0)

Non-current assets (cost less depreciation)	$000
Premises	12,546.5
Plant and equipment	5,937.1
Motor vans at cost	826.2
Current assets	19,309.8
Inventories	2,182.7
Trade receivables	2,018.6
Cash at bank	1,246.9
	5,448.2
Total assets	24,758.0
Equity $1 Ordinary shares	2,200.0
Retained profit	7,927.9
Non-current liabilities	10,127.9
7% Loan notes	6,905.0
Current liabilities Trade payables	6,362.3
Accrued expenses	1, 362.8
	7,725.1
Total equity and liabilities	24,758.0
Information from Income statement for the year ended 31 January of Current Year (Year 0)
	$000
Sales revenue	61,937.8
Less Cost of sales	32,937.6
Gross profit	29,000.2
minus Selling and distribution expenses	15,083.2
minus Administration expenses	10,986.6
Operating profit (EBIT) minus interest expense	2,930.4 470.0
Earning after interest minus Taxation Net Earning	2,460.4 492.08 1,968.32

Stock price 52-week High ($)	Stock price 52-week Low ($)	Company	Latest Stock Price ($)	Dividend Yield (%)	P/E ratio
8.32	4.12	Riverstone	6.82	2.5	19.8
10.54	5.21	Sempornarex	5.92	1.2	17.3
3.92	1.83	Max Glove	2.94	1.5	15.2
23.21	7.85	Permas Glove	12.70	0.9	24.2
4.56	1.54	Kuala Kepong Rubber	2.02	0.6	12.3
7.54	2.12	Aurelia Gloves	2.96	0.0	16.9

In the early stages of negotiation between the two companies, the following information was provided by Anatha Raj:

• The sales and EBIT of UNITED GLOVE is expected to grow at about 4% each year over the next five years. They will stabilise (zero growth) after that because the market is fairly competitive and there is little prospect of growth.

• The amount of capital expenditure (CAPEX) spent to replace old machinery items (non-current assets) will be more or less the same with the annual depreciation expense of these items. Therefore, both items will offset each other.

• However, the company is committed to another separate CAPEX on building a new plant costing $8.0 million over the next four years. The cost of this new plant would be spread evenly over the four-year period.

• Additional working capital needs over the next 3 years are estimated to be around $1.2 million each year. No additional working capital is needed after year 3.

• In previous years, the total dividend paid was around $1,500,000 per year.

Renco Group has an estimated cost of capital of 10% in which the management believe is applicable to the valuation of UNITED GLOVE once it is acquired and becomes part of the group. Assume a tax rate of 20 per cent is applicable for both Renco Group and UNITED GLOVE. Renco has 10 million ordinary shares in issue and the current market value of a share is $15.

• From the above case study and the data provided, perform a corporate and stock valuation using the approach:
• PVGO approach based on the additional information below:

There is a group of analysts who are pessimistic about the outlook of glove industry post the COVID-19 pandemic. They believe that the over expansion of outputs among the glove manufacturers during the pandemic has caused the oversupply of gloves in the international market and as such glove manufacturers (including UNITED GLOVE) are expected to be earning back only their cost of capital in the foreseeable future. These analysts estimated UNITED GLOVEs next year net earnings to be only 5% higher than the current net earnings.