Discounted cash flow valuation of com7 public company limited

Abstract

This thematic paper looks into the assessment of the target price of COM7 Public Company Limited’s stock (COM7). The approach applied in this paper is based on the discounted cash flow (DCF) valuation method to determine our estimated target price. The company's revenue experienced a Compound Annual Growth Rate (CAGR) of 22.44% from 2018 to 2022 due to branch expansion and the growth of the IT market in Thailand. The forecasted revenue CAGR from 2023 to 2027 is 9.76%, driven by the expected GDP growth in Thailand, with a terminal growth rate of 3.00% per year after 2027. Following the DCF analysis, the target price for COM7 is projected to be 23.36 Baht per share as of December 31, 2023. This estimated price reflects a 4.29% increase compared to the current price, which stood at 22.4 Baht as of December 4, 2023. Despite the undervalued current stock price according to our DCF valuation, economic fluctuations and challenges in improving profit in this retail business play a significant role in our assumptions, and COM7 is now facing the situation to improve their business under this circumstance. Therefore, our recommendation for COM7 stock is to “Hold”.