Can someone please help me on how to value the equity of consolidated company (Parent) who has two investments in associate (Ownership ratio: 25% and 40%, respectively) whose business is core of the parent. these associate companies are accounted under equity method so equity pick-up is recorded in non-operating income.
I initially treated investments in associate as a cash-like item in my analysis to calculate from EV to equity value. However, now i am quite confused because these investment in associates are core to the parents and parent equity value/enterprise value should reflect cash generated by these associate companies.
Does someone know if i should be adding back the revenue from investment in associates recorded in non-operating revenue to EBITDA and include in unlevered free cash flow calculation or not? Or is there any other practical way for calculating consolidated company with investment in associate whose business is core to the consolidated company.
thanks
