Application of Discounted Cash Flow Model in Developing and Emerging Markets Company Valuation

Written by The Research Team

March 15, 2024

Dataffluent Limited is a research and data science company focused on financial entities in the Caribbean. As of writing this document, the Caribbean has four exchanges, in Jamaica, The Eastern Caribbean, Barbados and Trinidad and Tobago. Initially, the focus is placed on the Jamaica Stock Exchange (JSE) which was incorporated in 1968 and is now the largest exchange in the Caribbean by size and market capitalization. The JSE operates five (5) markets, the Main Market, The Junior Market, The US Denominated Market, a Bond Market and a Private Equity Market. The JSE has 102 securities across various sectors and industries that will be evaluated to determine their intrinsic value. The valuation will be conducted using the Discounted Cash Flow (DCF) technique. The methodology used to prioritize securities was at the outset companies with the highest market capitalization.

Over time, increasing focus was placed on the most prominent professionally managed equity funds in Jamaica. These funds Top 10 securities provide an additional anchor for further prioritization of securities to be modelled.

Keywords: DCF valuation, Linear Regression, CAPM, WACC

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