What the f*nance is going on

(Part 2) AirAsia Group: Highly-levered Malaysian airline sweetheart. Gambling, or justified high-risk bet?  Star troopers? In my last post, I talked about what I think AirAsia Group’s direction is headed, and I used a traditional DCF valuation based on that story. It might seem surprising to see that the valuation output is surprisingly low, even with pretty decent assumptions. Before we give up on the company. I think traditional DCF models are unable to capture the true value of companies, especially those highly distressed. This is because, in a discounted cash flow approach, the primary assumption we make is that the company will be around in perpetuity, meaning, forever. It does not account for the fact that some companies, especially highly distressed, have a high probability of not surviving in the next few years. If traditional DCF models don’t work, let’s try some other approaches to valuation. Relative valuation: the pricing game Relative valuation is highly popular