What is HE.TO's Intrinsic value?

Hanwei Energy Services Corp (HE.TO) Intrinsic Value Analysis

Executive Summary

As of June 21, 2025, Hanwei Energy Services Corp's estimated intrinsic value ranges from $2.69 to $2.69 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Dividend Discount Model (Stable) $2.69 +17864.0%

Is Hanwei Energy Services Corp (HE.TO) undervalued or overvalued?

With the current market price at $0.01, 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 Hanwei Energy Services Corp's intrinsic value, including:

  1. 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 3.4% 3.9%
Equity market risk premium 4.7% 5.7%
Adjusted beta 0.4 0.7
Cost of equity 5.3% 8.4%
Cost of debt 4.7% 10.5%
Tax rate 26.5% 26.5%
Debt/Equity ratio 1.24 1.24
After-tax WACC 4.3% 8.0%

Valuation Methods

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: 6.8%
  • Long-term growth rate: 3.5%
  • Fair value: $-0.20 (-1460.5% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 8.4% (Low) to 5.3% (High)
  • Long-term growth rate: 3.0% (Low) to 4.0% (High)
  • Fair value range: $1 to $5
  • Selected fair value: $2.69 (17864.0% from current price)

Key Financial Metrics

Metric Value
Market Capitalization $4M
Enterprise Value $5M
Trailing P/E 0.24
Forward P/E 0.24
Trailing EV/EBITDA 5.80
Current Dividend Yield 0.00%
Dividend Growth Rate (5Y) 0.00%
Debt-to-Equity Ratio 1.24

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
Dividend Discount Model (Stable) 100% $0.40
Weighted Average 100% $2.69

Investment Conclusion

Based on our comprehensive valuation analysis, Hanwei Energy Services Corp's weighted average intrinsic value is $2.69, which is approximately 17864.0% above the current market price of $0.01.

Key investment considerations:

  • Strong projected earnings growth (-51% to -25% margin)
  • Consistent cash flow generation

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