What is BBD.WA's Intrinsic value?

BBI Development SA (BBD.WA) Intrinsic Value Analysis

Executive Summary

As of June 17, 2025, BBI Development SA's estimated intrinsic value ranges from $14.62 to $16.46 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Discounted Cash Flow (10Y) $16.46 +196.7%
Discounted Cash Flow (5Y) $14.62 +163.5%

Is BBI Development SA (BBD.WA) undervalued or overvalued?

With the current market price at $5.55, 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 BBI Development SA's intrinsic value, including:

  1. Discounted Cash Flow (DCF): Values the company based on projected future cash flows

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 5.5% 6.0%
Equity market risk premium 6.3% 7.3%
Adjusted beta 0.95 1.21
Cost of equity 11.6% 15.4%
Cost of debt 5.0% 5.0%
Tax rate 6.8% 13.3%
Debt/Equity ratio 1.32 1.32
After-tax WACC 7.6% 9.1%

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: 8.4% (range: 0.0% - 9.3%)

Key Projections:

  • Revenue growth from $14 (FY12-2024) to $18 (FY12-2034)
  • Net profit margin expansion from -24% to -30%
  • Capital expenditures maintained at approximately 1% of revenue
DCF Model Fair Value Enterprise Value % from Terminal Value
5-Year Growth $15 $220M 68.1%
10-Year Growth $16 $239M 48.1%
5-Year EBITDA $7 $143M 50.8%
10-Year EBITDA $11 $179M 30.9%

Key Financial Metrics

Metric Value
Market Capitalization $56M
Enterprise Value $128M
Trailing P/E 0.00
Forward P/E 0.00
Trailing EV/EBITDA 6.20
Current Dividend Yield 0.00%
Dividend Growth Rate (5Y) -49.95%
Debt-to-Equity Ratio 1.32

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) 55% $4.94
Discounted Cash Flow (5Y) 45% $3.66
Weighted Average 100% $15.63

Investment Conclusion

Based on our comprehensive valuation analysis, BBI Development SA's weighted average intrinsic value is $15.63, which is approximately 181.6% above the current market price of $5.55.

Key investment considerations:

  • Strong projected earnings growth (-24% to -30% margin)
  • Consistent cash flow generation

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