At Valuecruncher we have just completed our most recent review of NZX companies in our dataset.  This involves a review of the assumptions we are using in the valuations. We use consensus analyst estimates as the basis of our assumptions.  For example - consensus analyst estimates of revenues for New Zealand’s largest listed company Telecom New Zealand ($TEL.NZ).  Valuecruncher uses these numbers and our own assessments of other valuation assumptions such as the discount rate and terminal growth rate.

At Valuecruncher we then pull all of these variables together and place a valuation on the shares of the companies in our data-set and provide a recommendation.  You can either simply look at our valuations - or for all the experts out there, you can change the assumptions we have used and modify the valuation.  Modified valuations can be saved and shared.

With the completion of our monthly review of the companies on the NZX (New Zealand stock exchange) we decided to outline what we at Valuecruncher see as the most undervalued (the best buys).

We should note that you can always find a list of the Valuecruncher buy recommendations for the NZX from the most undervalued using our filters.  The following list highlights the top five buys based on the latest review of the valuation assumptions.

Valuecruncher’s Top Five Buys On The NZX - June 2009

Number 1

Rakon ($RAK.NZ) is a New Zealand-based designer and manufacturer of high-performance frequency control technology. Valuecruncher currently values $RAK.NZ at NZ$1.87 - 24% above the current share price.

Valuecruncher Interactive Analyst Report For $RAK.NZ

Number 2

Sky Network Television ($SKT.NZ) is a provider of pay and free-to-air television services in New Zealand.  Valuecruncher currently values $SKT.NZ at NZ$5.156 - 22% above the current share price.

Valuecruncher Interactive Analyst Report For $SKT.NZ

Number 3

Sky City ($SKC.NZ) is a New Zealand-listed gaming, hotel and entertainment company.  Valuecruncher currently values $SKC.NZ at NZ$3.19 - 20% above the current share price.

Valuecruncher Interactive Analyst Report For $SKC.NZ

Number 4

Methven ($MVN.NZ) is a New Zealand company that designs and supplies taps and shower-ware.  Valuecruncher currently values $MVN.NZ at NZ$1.65 - 20% above the current share price.

Valuecruncher Interactive Analyst Report For $MVN.NZ

Number 5

Steel & Tube ($STU.NZ) is a New Zealand-based steel and industrial products company.  Valuecruncher currently values $STU.NZ at NZ$3.29 - 13% above the current share price.

Valuecruncher Interactive Analyst Report For $STU.NZ

Those are our top five buys for June 2009.  You can also always find a list of the Valuecruncher sell recommendations for the NZX from most overvalued up using our filters.

Disclosure: None

Methven ($MVN.NZ) is a New Zealand company that designs and supplies taps and shower-ware.  $MVN.NZ has risen over 30% since hitting a low of NZ$0.97 in March. $MVN.NZ is currently trading at NZ$1.30.  How is this in relation to the intrinsic value of the company’s shares?

Valuecruncher Interactive Analyst Report for $MVN.NZ

Valuecruncher produces a valuation of NZ$1.67 for $MVN.NZ. This is a current valuation (an estimate of intrinsic value using a discounted cash flow model) not a target price. This valuation is 28.5% above the current share price of NZ$1.30.

Assumptions

• Revenue: Reuters aggregates four analysts covering $MVN.NZ and the mean estimates of 2010 and 2011 revenues are NZ$141.6 million and NZ$146.1 million respectively. For our analysis we have used NZ$145.0 million in 2010, NZ$150.0 million in 2011 and NZ$155.0 million in 2012.
• Profitability: We have used a flat EBITDA margin of 14.0% to 2012. Reuters don’t list an EBITD margin for $MVN.NZ.
• Capital Expenditure: We have assumed capital expenditures of NZ$3.0 million per annum moving forward.
• Discount Rate: 11.0%. The PwC New Zealand cost of capital report does not list $MVN.NZ but has the wider market at 8.3%. We believe a discount rate in the 10-12% range is appropriate. We have chosen the middle of this range.
• Terminal Growth Rate: 2.0%.

Our analysis incorporates the cash and debt on the $MVN.NZ balance sheet – Valuecruncher calculates a net debt number.

Play with our assumptions – what does your analysis say?

Disclosure: None

With the launch of our new interactive analyst reports we complete a monthly review of the approximately 750 valuations in our data-set.  This involves a review of the assumptions we are using in the valuations. We use consensus analyst estimates as the basis of our assumptions.  For example - consensus analyst estimates of revenues for New Zealand’s largest listed company Telecom New Zealand ($TEL.NZ).  Valuecruncher uses these numbers and our own assessments of other valuation assumptions such as the discount rate and terminal growth rate.

At Valuecruncher we then pull all of these variables together and place a valuation on the shares of the companies in our data-set and provide a recommendation.  You can either simply look at our valuations - or for all the experts out there, you can change the assumptions we have used and modify the valuation.  Modified valuations can be saved and shared.

With the completion of our monthly review of the companies on the NZX (New Zealand stock exchange) we decided to outline what we at Valuecruncher see as the most undervalued (the best buys).

We should note that you can always find a list of the Valuecruncher buy recommendations for the NZX from the most undervalued using our filters.  The following list highlights the top five buys based on the latest review of the valuation assumptions.

Valuecruncher’s Top Five Buys On The NZX - March 2009

Number 1

Michael Hill International ($MHI.NZ) is a New Zealand-based jewelry retailer and manufacturer.  Valuecruncher currently values $MHI.NZ at NZ$0.71 - 39% above the current share price.

Valuecruncher Interactive Analyst Report For $MHI.NZ

Number 2

Sky Network Television ($SKT.NZ) is a provider of pay and free-to-air television services in New Zealand.  Valuecruncher currently values $SKT.NZ at NZ$5.06 - 33% above the current share price.

Valuecruncher Interactive Analyst Report For $SKT.NZ

Number 3

Hallenstein Glasson Holdings ($HLG.NZ) is a NZX-listed clothing retailer.  Valuecruncher currently values $HLG.NZ at NZ$2.49 - 26% above the current share price.

Valuecruncher Interactive Analyst Report For $HLG.NZ

Number 4

Air New Zealand ($AIR.NZ) is an international and domestic airline based in New Zealand.  Valuecruncher currently values $AIR.NZ at NZ$1.11 - 24% above the current share price.

Valuecruncher Interactive Analyst Report For $AIR.NZ

Number 5

Methven ($MVN.NZ) is a New Zealand company that designs and supplies taps and shower-ware.  Valuecruncher currently values $MVN.NZ at NZ$1.27 - 18% above the current share price.

Valuecruncher Interactive Analyst Report For $MVN.NZ

Those are our top five buys for March 2009.  You can also always find a list of the Valuecruncher sell recommendations for the NZX from most overvalued up using our filters.

Disclosure: None

Methven ($MVN.NZ) is a New Zealand company that designs and supplies taps and shower-ware.  $MVN.NZ is trading toward the bottom of their 52-week range. How is this in relation to the intrinsic value of the company’s shares?

Valuecruncher valuation model of $MVN.NZ with interactive assumptions

Valuecruncher produces a valuation of NZ$1.68 for $MVN.NZ. This is a current valuation (an estimate of intrinsic value using a discounted cash flow model) not a target price. This valuation is 18.3% above the current share price of NZ$1.42.

Assumptions

• Revenue: Reuters aggregates four analysts covering $MVN.NZ and the mean estimates of 2009 and 2010 revenues are NZ$142.1 million and NZ$149.8 million respectively. For our analysis we have used NZ$140.0 million in 2009, NZ$145.0 million in 2010 and NZ$150.0 million in 2011.
• Profitability: We have used a flat EBITDA margin of 14.0% to 2011. Reuters don’t list an EBITD margin for $MVN.NZ.
• Capital Expenditure: We have assumed capital expenditures of NZ$4.0 million per annum moving forward.
• Discount Rate: 11.0%. The PwC New Zealand cost of capital report does not list $MVN.NZ but has the wider market at 9.5%. We believe a discount rate in the 10-12% range is appropriate. We have chosen the middle of this range.
• Terminal Growth Rate: 3.0%.

Our analysis incorporates the cash and debt on the $MVN.NZ balance sheet – Valuecruncher calculates a net debt number.

Play with our assumptions – what does your analysis say?

Disclosure: None