Dapai Analysis – Part 4

In this part of the analysis, we will look at the SWOT analysis and intrinsic value of the company.

SWOT Analysis

Intrinsic value

I did a DCF intrinsic value calculation. I used average free cash flow growth rate as 0% (to be ultra-conservative) and discount rate as 9%. The intrinsic value I got was $0.35. The latest quarter NAV is at $0.30. Thus, it is around 32% undervalued when using the NAV.

Even with 0% CF growth rate, the stock is very much undervalued with very high MOS. I feel buying Dapai is almost a risk-free purchase as the company is debt-free, has lots of cash and intrinsic value is high.

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2 thoughts on “Dapai Analysis – Part 4

  1. Hi,

    Interesting to read on your analysis of Dapai. But i just dont understand why the share price is not supported? Today it hit a low price of 0.095, pending their rights issue after the shareholders meeting.

    • Hi J,

      Thanks for visiting my blog. I’ve sold Dapai ever since due to various reasons. I have blogged about it at https://financiallyfreenow.wordpress.com/2010/11/04/goodbye-dapai/

      Dapai is doing a rights issue even though it has so much cash in its coffers. I feel rights issue is not needed even if they want the money for potential acquisition. Dapai is diluting the shareholders unnecessarily.

      I also wonder why their trade receivables ballooned so much for 1Q2011. Perhaps they are doing channel stuffing?

      They also released a statement recently saying their are not pursuing a secondary listing. The idea was not needed in the first place as they have so much cash. I don’t really have much trust in the management following all these issues. If you are holding on to Dapai, you need to look into all these.

      Perhaps these may be the reasons why the price hit a low of $0.095 and closed at $0.105 on Fri.

      Cheers!

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