What is CIE.WA's Intrinsic value?

Ciech SA (CIE.WA) Intrinsic Value Analysis

Executive Summary

As of June 19, 2025, Ciech SA's estimated intrinsic value ranges from $61.27 to $89.92 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Discounted Cash Flow (10Y) $89.92 +69.7%
Discounted Cash Flow (5Y) $79.32 +49.7%
Dividend Discount Model (Multi-Stage) $69.76 +31.6%
Dividend Discount Model (Stable) $61.27 +15.6%

Is Ciech SA (CIE.WA) undervalued or overvalued?

With the current market price at $53.00, 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 Ciech SA'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 5.5% 6.0%
Equity market risk premium 6.3% 7.3%
Adjusted beta 0.5 0.74
Cost of equity 8.7% 11.9%
Cost of debt 4.0% 8.6%
Tax rate 26.6% 36.0%
Debt/Equity ratio 0.72 0.72
After-tax WACC 6.3% 9.3%

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: 5-year DCF and 10-year DCF
  • Terminal Growth Rate: 0.0% (range: 3.0% - 5.0%)
  • Discount Rate: 7.8% (range: 0.0% - 9.3%)

Key Projections:

  • Revenue growth from $5,415 (FY12-2022) to $6,556 (FY12-2032)
  • Net profit margin expansion from 10% to 7%
  • Capital expenditures maintained at approximately 19% of revenue
DCF Model Fair Value Enterprise Value % from Terminal Value
5-Year Growth $79 $5,931M 74.2%
10-Year Growth $90 $6,489M 53.7%
5-Year EBITDA $119 $8,032M 81.0%
10-Year EBITDA $122 $8,185M 63.3%

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: 104.0%
  • Stable payout ratio: 90.0%
  • Growth transition: 5 years
  • Cost of equity: 10.3%
  • Long-term growth rate: 0.5%
  • Fair value: $69.76 (31.6% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 11.9% (Low) to 8.7% (High)
  • Long-term growth rate: 0.0% (Low) to 1.0% (High)
  • Fair value range: $41 to $82
  • Selected fair value: $61.27 (15.6% from current price)

Key Financial Metrics

Metric Value
Market Capitalization $2793M
Enterprise Value $4543M
Trailing P/E 7.60
Forward P/E 7.08
Trailing EV/EBITDA 5.25
Current Dividend Yield 1367.92%
Dividend Growth Rate (5Y) -33.13%
Debt-to-Equity Ratio 0.72

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% $26.98
Discounted Cash Flow (5Y) 28% $19.83
Dividend Discount Model (Multi-Stage) 22% $13.95
Dividend Discount Model (Stable) 17% $9.19
Weighted Average 100% $77.72

Investment Conclusion

Based on our comprehensive valuation analysis, Ciech SA's weighted average intrinsic value is $77.72, which is approximately 46.6% above the current market price of $53.00.

Key investment considerations:

  • Strong projected earnings growth (10% to 7% margin)
  • Consistent cash flow generation

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