Valuation Case Study on Asiasons Capital Limited

Valuation Case Study on

Asiasons Capital Limited

1

Disclaimer and Declaration

The objective of the presentation is for educational purposes.

The full content of the presentation is for illustration

purposes only and should not be used as investment

recommendations. AB Maximus and its presenters are not

responsible for all investment activities conducted by the

participants and cannot be held liable for any investment loss.

The company and presenters may have personal interest in the

particular shares presented.

Agenda

Company Background 1

Industry Overview 2

Valuation 3

Risk 4

Company Background

Asiasons Capital Limited is a private equity

firm listed on SGX Mainboard since 2010

focusing on alternative investment

opportunities in Emerging East Asia.

Source: Company reports

Company Background

Investment

Management

Division

• Setting up private equity vehicles focusing on

the consumer and resources sector.

• Latest fund is called Dragonrider Opportunity

Fund II L.P. (“DOFII”) focusing on

acquisitions in the television, entertainment,

and food & beverage (F&B) sectors.

• F&B franchises include T.G.I. Friday’s,

Applebees restaurants, etc.

Source: Company’s Annual Report 2012

Company Background

Financial

Advisory

Division

• Focus on providing M&A advisory, and

investment banking services.

• Underwriting IPOs.

Source: Company’s Annual Report 2013

Company Background

Revenue growth (FY 2012 vs. FY 2011)

Source: Company’s Annual Report 2012

5,600

5,700

5,800

5,900

6,000

6,100

6,200

6,300

6,400

FY 2011 FY 2012

Revenue ($'000s)

Revenue ($'000s)

Company Background

Net profit growth (FY 2012 vs. FY 2011)

Source: Company’s Annual Report 2012

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

FY 2011 FY 2012

Net profit ($'000)

Net profit ($'000)

Industry Overview

Asean 4 (Indonesia, Malaysia, Thailand, and Philippines_

expected consumption growth rates of 5.0 – 6.5% over

next 5 to 10 years.

Increasingly young and urban population in these

countries who have varied interests towards

entertainment and fashion.

Growth in disposable income and corresponding

discretionary spending.

Source: Company Annual Report 2012

Industry Overview

Investors, retail and institution, are able to invest in a

public-listed private equity firm without facing the high

investment barriers, ie. the 2.0% management fee/

20.0% performance fee (2/20) associated with many PE

firms.

Year-to-date (YTD) track record of achieving approx.

38.0% Internal rate of return (IRR).

Source: Company Annual Report 2012

Valuation

Methodology

Discounted cash flow (DCF) for private equity industry using

WACC (%) of 7.0%; 5-year time horizon; growth of 5.0% in

first year and second year, 6.0% in third year, 2.0% terminal

growth rate (Year T+1).

Beta obtained from Reuters.com was 0.12, compared to

average industry beta of 0.96.

Growth drivers include potential acquisitions of entertainment

and F&B assets, savvy youth market, growing private equity

interest in South-East Asia.

Valuation

Risk Free Rate 3.1%

Market Required Return 10.0%

Beta 0.12

Cost of Equity (CAPM) 4.0%

Cost of Debt 7.6%

WACC + small company bias 7.0%

Equity Market Risk Premium 7.5%

Source: Reuters.com and Company Reports

Valuation

Investment Management Division

• Continued expansion into regional markets in South

East Asia seeking profitable private-equity

opportunities.

• Focus on growth opportunities in the entertainment

and F&B sector.

• Tap into the growing affluence of Asian consumers

who are constantly keeping up with new trends.

Valuation

Financial Advisory Division

Acquisition of 32.6% indirect interest in the issued

share capital of Asiasons WFG Capital Pte. Ltd. allows

the Group to tap into the corporate advisory services

market. (Transaction completed on Jan 04, 2013)

Expectations of an increment in IPOs in the Asian

region, and underwriting services are likely to be in

demand.

Valuation

2013F 2014F 2015F 2016F 2017F

FCFF ($’000) $33,962 $33,318 $32,997 $32,063 $30,856

Terminal Value

(FCFF2018/r) $1,550,236

FCFF $33,962 $33,318 $32,997 $32,063 $1,581,092

NPV ($’000) $1,713,433

Minus Debt $7,874

Add Cash $12,245

FCFF due to

share holders $1,717,803

no. of shares

(‘000) 997,760

Fair Value per

Share SGD 1.75

Trading Data

52 Weeks Trading Range $0.52 - $0.99

Avg Volume (3 mths) 9.7 mil

Market Cap $930.8 mil

Source: Reuters.com

Main Risks

Valuation assumes that the pace of investment growth

remains stable, and less volatile financial markets in

the next year or so.

Entertainment and F&B assets do not display any

material impairments going forward.

Movie Media/Entertainment industry.

F&B expansion through its SGX-listed subsidiary

Chaswood Resources.

Main Risks

Default Risk – Low (As of end FY 2012)

Current ratio = 5.2x

Interest coverage = 29.6 x

D/E ratio = 0.0

Revolving credit facilities utilized as of 1Q13 = $7.4 mil

Cash as of end 1Q13 = $11.3 mil

Source: Company reports