What is BILZ.CN's Intrinsic value?

Ignite International Brands Ltd (BILZ.CN) Intrinsic Value Analysis

Executive Summary

As of May 27, 2025, Ignite International Brands Ltd's estimated intrinsic value ranges from $0.36 to $0.75 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Discounted Cash Flow (10Y) $0.75 +35.7%
Discounted Cash Flow (5Y) $0.56 +1.8%
Dividend Discount Model (Multi-Stage) $0.36 -34.0%
Dividend Discount Model (Stable) $0.52 -5.7%

Is Ignite International Brands Ltd (BILZ.CN) undervalued or overvalued?

With the current market price at $0.55, the stock appears to be fairly valued.

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 Ignite International Brands Ltd'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 3.2% 3.7%
Equity market risk premium 5.1% 6.1%
Adjusted beta 0.83 1.09
Cost of equity 7.4% 10.8%
Cost of debt 5.4% 5.4%
Tax rate 25.9% 26.5%
Debt/Equity ratio 0.15 0.15
After-tax WACC 6.9% 9.9%

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 $79 (FY12-2021) to $110 (FY12-2031)
  • Net profit margin expansion from 7% to 5%
  • Capital expenditures maintained at approximately 5% of revenue
DCF Model Fair Value Enterprise Value % from Terminal Value
5-Year Growth $1 $58M 84.9%
10-Year Growth $1 $78M 60.3%
5-Year EBITDA $3 $287M 97.0%
10-Year EBITDA $2 $256M 87.9%

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: 0.0%
  • Stable payout ratio: 90.0%
  • Growth transition: 5 years
  • Cost of equity: 9.1%
  • Long-term growth rate: 0.5%
  • Fair value: $0.36 (-34.0% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 10.8% (Low) to 7.4% (High)
  • Long-term growth rate: 0.0% (Low) to 1.0% (High)
  • Fair value range: $0 to $1
  • Selected fair value: $0.52 (-5.7% from current price)

Key Financial Metrics

Metric Value
Market Capitalization $60M
Enterprise Value $57M
Trailing P/E 10.93
Forward P/E 14.12
Trailing EV/EBITDA 30.20
Current Dividend Yield 0.00%
Dividend Growth Rate (5Y) 0.00%
Debt-to-Equity Ratio 0.15

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% $0.22
Discounted Cash Flow (5Y) 28% $0.14
Dividend Discount Model (Multi-Stage) 22% $0.07
Dividend Discount Model (Stable) 17% $0.08
Weighted Average 100% $0.57

Investment Conclusion

Based on our comprehensive valuation analysis, Ignite International Brands Ltd's weighted average intrinsic value is $0.57, which is approximately 3.9% above the current market price of $0.55.

Key investment considerations:

  • Strong projected earnings growth (7% to 5% margin)
  • Consistent cash flow generation
  • Conservative capital structure (Debt/Equity of 0.15)

Given these factors, we believe Ignite International Brands Ltd is currently fairly valued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.