Fair value - have you ever wondered what is fair value and what is not? When someone says the fair value of ABC company is 50 cents, what exactly does it mean? Is it true that as long as someone is willing to pay a price for it at arms length, that value is a fair one? (this topic can go on and on for days without a conclusion). hahaha
I managed to get 3 lots of Avi-Tech from the public tranche (it has been a long time!) and i exited early this morning but somehow the share price of AVI just keep going up and up and closed at 75.5 cents versus the IPO price of 33 cents. It somewhat proved to me that my "fair value" for Avi-Tech is 'wrong'. Perhaps i should be less biased against tech companies and should be more aggressive in my valuation matrix and should be more convinced about the placement capability of Westcomb as well.. :P
Based on the current bullish sentiments, should i then revise my valuation matrix for tech companies to 15-20x instead of the 8-10x? If i have used a more 'bullish' valuation matrix, the fair value range for Avi-Tech and MAP Technology will be between 64 cents to 86 cents.
However, what may be a "fair value" today may not be the "fair value" 6 months down the road and it is affected by many different factors. As such, do take note that the fair value presented in my blog is based on the information i derive from the prospectus, the assumptions i made regarding growth of the Company and this fair value can vary greatly as time progress when new facts are presented regarding the growth and execution capability of the management. The visibility of the Company will also be clearer as time progressed.