RE: The bull case to invest in Vctory24 May 2021 05:37
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And finally assuming RBD has around 9bn Shares In Issue we get to £191.5m ÷ 9bn to give us 2.12p per share.
Amongst other valuation models generally used, most common is one that benchmarks the opportunity against similar ones in the same space and time. Those producing gas that is.This can be the most appropriate. But what’s coming out of these assessments is the NPV given in the current CPR looks skinny and perhaps that’s behind the reason for a new one. We’re about to find out if I’m right in a fews days.
Professional Analysts or rather the better ones will use several methods and then take a weighted average. But of course the real value of anything material will be what an offeree is prepared to pay for it. In other words more of a commercial approach taking expert valuations as references.
A commercial offer from a suitor may be more than or less than their respective valuers assessments. As often happens an initial offer may be less but is likely not to be the only one the offeror may make.
So overall in a sale situation I think a suitor might look for as much as a 33.3% discount to a reasonable valuations by qualified experts. If that's right I believe we're looking at an acceptable offer of around 1.35p to1.50p per share as things stand. At the time of writing RBD’s SP is just 0.70p! That’s a demonstration that Victory could possibly have a sale value of RBD’s current Market Cap to the upside of 2x in it’s own right without counting any of RBD’s other assets.
If the new CPR gives us a bigger resource as the Corallian & RBD the JV partners believe then we may have to reconsider the metrics I’ve used in the equation, not least of all the p/e ratio. It seems the owners are basing their judgement on new found information if they believe the current CPR is too conservative. I very much doubt they’re simply guessing. A clue lies on page four of the presentation on Victory, RBD states that "SLR has been appointed and an interim CPR of the resource range completed". That was in November 2020. Although the Interim CPR was never published it’s evident the information it contained must have indicated notably better metrics. Hence the new CPR having been commissioned.
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