What is APF.L's Intrinsic value?

Anglo Pacific Group PLC (APF.L) Intrinsic Value Analysis

Executive Summary

As of May 22, 2025, Anglo Pacific Group PLC's estimated intrinsic value ranges from $115.34 to $452.23 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Discounted Cash Flow (10Y) $130.70 -15.9%
Discounted Cash Flow (5Y) $174.82 +12.5%
Dividend Discount Model (Multi-Stage) $115.34 -25.8%
Dividend Discount Model (Stable) $452.23 +191.0%

Is Anglo Pacific Group PLC (APF.L) undervalued or overvalued?

With the current market price at $155.40, 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 Anglo Pacific Group PLC's intrinsic value, including:

  1. Discounted Cash Flow (DCF): Values the company based on projected future cash flows
  2. Dividend Discount Model (DDM): Values the company based on expected future dividend payments

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 4.4% 4.9%
Equity market risk premium 6.4% 7.4%
Adjusted beta 0.75 0.9
Cost of equity 9.3% 12.1%
Cost of debt 5.2% 10.7%
Tax rate 31.2% 31.5%
Debt/Equity ratio 0.11 0.11
After-tax WACC 8.7% 11.6%

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: 5-year DCF and 10-year DCF
  • Terminal Growth Rate: 0.0% (range: 3.0% - 5.0%)
  • Discount Rate: 10.2% (range: 0.0% - 9.3%)

Key Projections:

  • Revenue growth from $142 (FY12-2022) to $61 (FY12-2032)
  • Net profit margin expansion from 67% to 65%
  • Capital expenditures maintained at approximately 99% of revenue
DCF Model Fair Value Enterprise Value % from Terminal Value
5-Year Growth $175 $483M 65.5%
10-Year Growth $131 $372M 38.6%
5-Year EBITDA $279 $745M 77.6%
10-Year EBITDA $217 $591M 61.3%

2. Dividend Discount Model (DDM)

The DDM values a company based on its expected future dividend payments. We used two approaches:

Multi-Stage DDM:

  • Current payout ratio: 20.5%
  • Stable payout ratio: 90.0%
  • Growth transition: 5 years
  • Cost of equity: 10.7%
  • Long-term growth rate: 3.0%
  • Fair value: $115.34 (-25.8% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 12.1% (Low) to 9.3% (High)
  • Long-term growth rate: 2.0% (Low) to 4.0% (High)
  • Fair value range: $260 to $644
  • Selected fair value: $452.23 (191.0% from current price)

Key Financial Metrics

Metric Value
Market Capitalization $391M
Enterprise Value $435M
Trailing P/E 4.13
Forward P/E 13.25
Trailing EV/EBITDA 9.30
Current Dividend Yield 495.85%
Dividend Growth Rate (5Y) 4.73%
Debt-to-Equity Ratio 0.11

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) 33% $39.21
Discounted Cash Flow (5Y) 28% $43.70
Dividend Discount Model (Multi-Stage) 22% $23.07
Dividend Discount Model (Stable) 17% $67.83
Weighted Average 100% $193.13

Investment Conclusion

Based on our comprehensive valuation analysis, Anglo Pacific Group PLC's weighted average intrinsic value is $193.13, which is approximately 24.3% above the current market price of $155.40.

Key investment considerations:

  • Strong projected earnings growth (67% to 65% margin)
  • Consistent cash flow generation
  • Conservative capital structure (Debt/Equity of 0.11)
  • Historical dividend growth of 4.73%

Given these factors, we believe Anglo Pacific Group PLC is currently significantly undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.