Key Points:
- The intrinsic value of AirNet Technology Inc. (NASDAQ:ANTE) is estimated to be US$0.77 using the 2 Stage Free Cash Flow to Equity model.
- The current share price of US$0.83 suggests that the stock is potentially trading close to its fair value.
In this article, the author uses the Discounted Cash Flow (DCF) model to estimate the intrinsic value of AirNet Technology Inc. (ANTE) by predicting the company’s future cash flows and discounting them to their present value. The author acknowledges that a DCF model may not be perfect for every situation, but it can be a useful tool for equity analysis.
The author explains that a two-stage DCF model is used, which takes into account two stages of growth. The first stage is a high-growth period, while the second stage is a period of steady growth. The author begins by estimating the next ten years of cash flows, since no analyst estimates are available. The previous free cash flow (FCF) is extrapolated, assuming that companies with declining FCF will slow their rate of decline and companies with growing FCF will see their growth rate slow over time.
The author then discounts the estimated future cash flows to their present value using a discount rate of 12%. The present values of the cash flows for the next ten years are calculated, resulting in a total equity value of US$6.9 million. The equity value is then divided by the number of shares outstanding to determine the fair value per share.
The author concludes that, based on the estimated fair value per share of US$0.77 and the current share price of US$0.83, AirNet Technology Inc. is potentially trading close to its fair value. However, the author reminds readers that the calculation is based on certain assumptions and should be viewed as a rough estimate.
Overall, this article provides an analysis of AirNet Technology Inc.’s intrinsic value using a DCF model. It highlights the potential fair value of the stock and emphasizes the importance of considering the assumptions and limitations of the calculation.