Archetype Conventions

Banks, property companies, holding companies, utilities, resource producers and ordinary operating companies create value through different balance sheets. One universal multiple or cash-flow model produces consistency of format at the expense of economic meaning.

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The Economic Question

Which asset, liability or operating relationship creates value for this company? For an industrial company, invested capital produces operating cash flow. For a bank, deposits and debt are operating raw material. For a REIT, property cash flow and financing interact. For a mine, reserves deplete. For a holding company, value sits across listed stakes, private businesses, parent cash and parent obligations.

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The Archetype Map

Every company is routed to an economic archetype before any model runs. The archetype determines the primary intrinsic lens, the family of peer multiples that can apply, and the companion variable a reader should check alongside any multiple.

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Banks and Insurers

Industrial enterprise value is awkward for a bank, because deposits and borrowings are operating inputs rather than financing choices. A residual-income model begins with common equity and adds the present value of future returns above the cost of equity. Residual income in a period = beginning common equity × (ROE − cost of equity) Equity value = current common equity + present value of future residual income The first line is the periodic figure. The second is the valuation, and it is the one that requires a forecast and a discount rate. Growth is constrained by regulatory capital and retained earnings. A low P/B multiple can indicate opportunity, weak asset quality, or an inability to earn the equity charge. ROE and credit quality decide which interpretation survives.

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REITs and Property Companies

Equity REITs and mortgage REITs are separate business models and are routed separately. For equity REITs, FFO and AFFO improve comparability when aligned data are available. When they are not, a book-value proxy is used only after confirming a comparable accounting basis, and an operating proxy is used when that evidence is inadequate. Dividend yield remains context, because an unsustainable payout can look attractive immediately before it is cut. Developers require project and land economics. A book-value multiple is labelled as a proxy, never presented as property NAV.

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Holding Companies

A complete holding-company valuation adds listed stakes, private businesses and other assets, then subtracts parent debt, tax leakage and other parent obligations. The look-through calculation is a sum-of-parts intrinsic value, and it is labelled as one. Separately, peer context blends book-value and earnings evidence where both legs have adequate support; that blend is market pricing for comparable holding structures, and it is not a second intrinsic estimate. Where the market trades below the look-through value, Parallax reports the gap and its composition rather than assuming a discount. A gap explained by parent debt, tax leakage on disposal or an unlisted stake that resists valuation is a different investment case from one with no identifiable cause.

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Utilities and Reporting Perimeters

Utility accounts can mix consolidated operating businesses with material equity-accounted income. When net profit repeatedly exceeds consolidated revenue, the income statement is warning that enterprise value and consolidated EBIT may not describe the same economic perimeter. In that case the model narrows to earnings-based evidence and states the limitation.

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Resources and Finite-Life Assets

A mine or concession is not a perpetual annuity. The operating model uses a production schedule, reserve life, price deck, cost curve, sustaining capital, royalties, tax and closure obligations. Market futures can anchor near-term commodity prices, and a normalized through-cycle deck is used beyond the liquid curve. The asset ends when the reserve or concession ends. For an exploration-stage company with no usable revenue, operating profit or earnings, a book-value multiple may still describe how the market treats funded balance-sheet capital. It is labelled as a limited proxy, because it does not value unrecognized reserves, permitting probability, future financing or dilution.

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Interpretation Note

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How to Assess the Result

Name the balance-sheet item or operating relationship that creates value. If the answer is deposits, reserves, property, projects or subsidiary stakes, verify that the selected method represents that item directly. Then check whether the peer multiple’s companion variable captures the central risk.

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When to Reassess

The company’s economics do not match the selected archetype; a REIT subtype is unresolved; book-value accounting bases differ; a resource life or closure cost is missing; or a holding-company result depends on an assumed discount rather than on look-through assets and obligations.

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How Parallax Applies This

Parallax routes each company to an economic archetype, applies the corresponding valuation and peer-metric hierarchy, and labels lower-order proxies. When evidence is inadequate, Parallax reconstructs it from aligned statements and market evidence, or shows that the context is unavailable. It does not switch to an economically unrelated metric merely to fill a panel.