More business opportunities at the beginning of 2023 - forecasted to be bad year of the Rabbit

Every generation needs a revolution - an entrepreneurial revolution

Just had a conversation the other day with a business friend, a bank executive regarding her query of the possibility of investing in a memorial park in the capital of island province.   There are no more inventories, and the land she presented to be a possible site 3 years ago at P400/00 sm is now a city

cemetery.

What are the things that favor such a project:

1.  The only memorial park in the city is sold out.

2.   The selling price is  P115k/plot - but there are no inventories

3.   The population of city is 307 k.

4.   The city is first class with annual revenue of P3.8 billion

Memorial opportunities:

    1.  Death rate at 0.5% = 15,000 (we can sell in one year)

    2.  Household  300,000/5 =  60,000

    3.  Class A and B buyers =  10% =  30,000.

We can have buyers in excess of inventories.  We can cover by having say 20,000 columbarium 

Possible sites:

1.  5.2 hectare going up north at P1,200/sm  (about 60m cash)

2.  JV with religious for a columbarium

For the 5.2 hectare, the yield would be about 12,500 plots that can be sold for P80k per plot or 1B

What to do:

1.  Talk to the religious for combi project of  MP and columbarium/crematorium

2.  Agree to P1,200  stagger payment, secure pre sales commitment to pay the balance.   

https://goo.gl/maps/bGuptJKytikcNW8r5

    

Forecast for economy for 2023

Every generation needs a revolution - an entrepreneurial revolution

Soothsayer,  feng shui experts say its going to be hard.   

From the lay, from the economists and the businessmen, its going to be bleak:

    1.  Threat of recession

    2.   Inflation

    3.   Threat of lack of liquidity -  repayments of maturing debt, too much money

           circulating

Indeed what must businessmen do:

   1.  More belt tightening

   2.  Hard work

   3.  Focus

 Business Forecast for 2023

Horrroscope 2023

      

Business valuation using correct formulas using dubious data

Every generation needs a revolution - an entrepreneurial revolution

This post was shown a due diligence report but reporting a valuation of only 6 number for a business

coughing out P4 - 5 million a year

Some errors were observed in the work purportedly a certified public accountant.  It was neither a due diligence nor a proper valuation report

1.  In the asset portion, the cash of the business totaling P8 m was totally disregarded?  What?  You are valuing the asset of the business and not considering if the cash will be dissipated or not

2  The consultant arrived at a Weighted Average Cost of Capital which was achieved only on the 5th year  And conveniently used this as WACC (ergo for the discounted cash flow the intrinsic method, a high 55% WAC would result in lower valuation

3.  In the intrinsic portion (NPV) analysis, there was no current year cash flow (and in actuality, the current net  cash flow amounts to P4.5 million

    1  In the projected cash flow for the next five years, 2023 cash flow is only P9,k

    2.  The WAC again of 55% erroneously computed is used as the discount factor.  The high %

         results in a very low valuation

PSE lists WACC at only 6.84 % and the 55% /5 is only 11%

Not every body understands business valuation    At entrepreneurship we teach  this skill