How we value
The method is chosen to suit the business. Applying a model designed for one kind of asset to another produces a figure that appears rigorous and is not.
- Banks and financial institutions: dividend discount and residual income. Free cash flow is not a meaningful measure of a balance sheet that lends for a living, so we do not pretend to compute it.
- Hydropower: licence-life discounted cash flow. A generation licence expires; the textbook perpetuity assumes otherwise. We value only the years the plant will run.
- Insurers and investment companies: justified price-to-book, single and two-stage, anchored to a return on equity the company can sustain rather than the one it last printed.
- Operating companies: free cash flow to firm and to equity, on growth assumptions that must survive the company's own record.
A valuation is an argument, not an oracle. Ours are built to be argued with, and every input is published so that it can be.
The discipline
No single number leaves this desk alone. Every appraisal carries a grid of what the value becomes at other discount rates and growth paths, and, where the spread matters, a simulated distribution around it. Cost of equity and the forecast path are the analyst's judgment, defended as such and never taken from a feed.
The result is not certainty. It is an analysis that can be challenged on a specific assumption rather than in general.