What is AG.UN.CN's Intrinsic value?

Arctic Glacier Income Fund (AG.UN.CN) Intrinsic Value Analysis

Executive Summary

As of May 22, 2025, Arctic Glacier Income Fund's estimated intrinsic value ranges from $1.26 to $1.57 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Discounted Cash Flow (10Y) $1.57 +31277.5%
Earnings Power Value $1.26 +25177.7%

Is Arctic Glacier Income Fund (AG.UN.CN) undervalued or overvalued?

With the current market price at $0.01, the stock appears to be significantly undervalued.

Understanding Intrinsic Value

Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Arctic Glacier Income Fund's intrinsic value, including:

  1. Discounted Cash Flow (DCF): Values the company based on projected future cash flows
  2. Earnings Power Value (EPV): Values the company based on its current earnings power, assuming no growth

Weighted Average Cost of Capital (WACC)

The cost of capital is a critical factor in valuation models, representing the required return for investors.

WACC Component Low High
Long-term bond rate 3.2% 3.7%
Equity market risk premium 4.6% 5.6%
Adjusted beta 27.63 40.4
Cost of equity 130.2% 230.4%
Cost of debt 5.0% 5.0%
Tax rate 8.3% 11.3%
Debt/Equity ratio 121.42 121.42
After-tax WACC 5.6% 6.3%

Valuation Methods

1. Discounted Cash Flow (DCF) Valuation

Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:

  • Forecast Period: 10-year DCF
  • Terminal Growth Rate: 0.0% (range: 3.0% - 5.0%)
  • Discount Rate: 5.9% (range: 0.0% - 9.3%)

Key Projections:

  • Revenue growth from $237 (FY12-2011) to $324 (FY12-2021)
  • Net profit margin expansion from -36% to -7%
  • Capital expenditures maintained at approximately 6% of revenue
DCF Model Fair Value Enterprise Value % from Terminal Value
5-Year Growth $(1,234) $191M 110.4%
10-Year Growth $2 $786M 92.9%
5-Year EBITDA $(1,234) $186M 110.6%
10-Year EBITDA $0 $402M 86.1%

3. Earnings Power Value (EPV)

EPV assesses a company's value based on its current normalized earnings power, assuming no growth.

EPV Component Value
Normalized Earnings $40M
Discount Rate (WACC) 6.3% - 5.6%
Enterprise Value $641M - $717M
Net Debt $236M
Equity Value $405M - $481M
Outstanding Shares 350M
Fair Value $1 - $1
Selected Fair Value $1.26

Key Financial Metrics

Metric Value
Market Capitalization $2M
Enterprise Value $238M
Trailing P/E 0.00
Forward P/E 0.00
Trailing EV/EBITDA 13.70
Current Dividend Yield 0.00%
Dividend Growth Rate (5Y) 0.00%
Debt-to-Equity Ratio 121.42

Investment Decision Framework

To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:

  1. Forecast Certainty: DCF methods rely on long-term projections, while earnings power value focuses on current normalized earnings
  2. Business Model Alignment: Dividend models are more appropriate for mature companies with established dividend policies
  3. Historical Accuracy: How well each method has predicted fair value historically

Valuation Weight Matrix

Valuation Method Weight Weighted Value
Discounted Cash Flow (10Y) 75% $0.47
Earnings Power Value 25% $0.13
Weighted Average 100% $1.49

Investment Conclusion

Based on our comprehensive valuation analysis, Arctic Glacier Income Fund's weighted average intrinsic value is $1.49, which is approximately 29752.5% above the current market price of $0.01.

Key investment considerations:

  • Strong projected earnings growth (-36% to -7% margin)
  • Consistent cash flow generation

Given these factors, we believe Arctic Glacier Income Fund is currently significantly undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.