What is CHRY.L's Intrinsic value?

Chrysalis Investments Ltd (CHRY.L) Intrinsic Value Analysis

Executive Summary

As of June 9, 2025, Chrysalis Investments Ltd's estimated intrinsic value ranges from $40.22 to $118.16 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Discounted Cash Flow (10Y) $118.16 +14.9%
Discounted Cash Flow (5Y) $110.71 +7.7%
Dividend Discount Model (Multi-Stage) $40.22 -60.9%
Dividend Discount Model (Stable) $67.59 -34.2%

Is Chrysalis Investments Ltd (CHRY.L) undervalued or overvalued?

With the current market price at $102.80, the stock appears to be moderately overvalued.

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 Chrysalis Investments 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 4.0% 4.5%
Equity market risk premium 6.0% 7.0%
Adjusted beta 0.99 1.54
Cost of equity 9.9% 15.7%
Cost of debt 5.0% 5.0%
Tax rate 19.0% 19.0%
Debt/Equity ratio 1 1
After-tax WACC 7.0% 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 $45 (FY09-2024) to $63 (FY09-2034)
  • Net profit margin expansion from 86% to 70%
  • Capital expenditures maintained at approximately 0% of revenue
DCF Model Fair Value Enterprise Value % from Terminal Value
5-Year Growth $111 $527M 72.6%
10-Year Growth $118 $565M 54.3%
5-Year EBITDA $69 $310M 53.4%
10-Year EBITDA $84 $391M 33.9%

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: 12.8%
  • Long-term growth rate: 2.0%
  • Fair value: $40.22 (-60.9% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 15.7% (Low) to 9.9% (High)
  • Long-term growth rate: 1.0% (Low) to 3.0% (High)
  • Fair value range: $36 to $99
  • Selected fair value: $67.59 (-34.2% from current price)

Key Financial Metrics

Metric Value
Market Capitalization $531M
Enterprise Value $486M
Trailing P/E 13.53
Forward P/E 15.88
Trailing EV/EBITDA 5.55
Current Dividend Yield 0.00%
Dividend Growth Rate (5Y) 0.00%
Debt-to-Equity Ratio 0.86

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% $35.45
Discounted Cash Flow (5Y) 28% $27.68
Dividend Discount Model (Multi-Stage) 22% $8.04
Dividend Discount Model (Stable) 17% $10.14
Weighted Average 100% $90.34

Investment Conclusion

Based on our comprehensive valuation analysis, Chrysalis Investments Ltd's weighted average intrinsic value is $90.34, which is approximately 12.1% below the current market price of $102.80.

Key investment considerations:

  • Strong projected earnings growth (86% to 70% margin)
  • Consistent cash flow generation

Given these factors, we believe Chrysalis Investments Ltd is currently moderately overvalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.