As of May 23, 2025, Henderson Far East Income Ltd's estimated intrinsic value ranges from $17.65 to $126.07 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $117.41 | -45.1% |
| Discounted Cash Flow (5Y) | $109.65 | -48.8% |
| Dividend Discount Model (Multi-Stage) | $126.06 | -41.1% |
| Dividend Discount Model (Stable) | $126.07 | -41.1% |
| Earnings Power Value | $17.65 | -91.8% |
Is Henderson Far East Income Ltd (HFEL.L) undervalued or overvalued?
With the current market price at $214.00, the stock appears to be significantly overvalued.
Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Henderson Far East Income Ltd's intrinsic value, including:
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 | 0.86 | 0.9 |
| Cost of equity | 9.1% | 11.3% |
| Cost of debt | 4.6% | 4.8% |
| Tax rate | 7.6% | 8.9% |
| Debt/Equity ratio | 0.04 | 0.04 |
| After-tax WACC | 8.9% | 11.0% |
Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:
| DCF Model | Fair Value | Enterprise Value | % from Terminal Value |
|---|---|---|---|
| 5-Year Growth | $110 | $198M | 69.7% |
| 10-Year Growth | $117 | $210M | 48.4% |
| 5-Year EBITDA | $81 | $150M | 60.2% |
| 10-Year EBITDA | $96 | $176M | 38.2% |
The DDM values a company based on its expected future dividend payments. We used two approaches:
EPV assesses a company's value based on its current normalized earnings power, assuming no growth.
| EPV Component | Value |
|---|---|
| Normalized Earnings | $4M |
| Discount Rate (WACC) | 11.0% - 8.9% |
| Enterprise Value | $39M - $49M |
| Net Debt | $15M |
| Equity Value | $25M - $34M |
| Outstanding Shares | 2M |
| Fair Value | $15 - $20 |
| Selected Fair Value | $17.65 |
| Metric | Value |
|---|---|
| Market Capitalization | $357M |
| Enterprise Value | $372M |
| Trailing P/E | 18.22 |
| Forward P/E | 23.22 |
| Trailing EV/EBITDA | 7.75 |
| Current Dividend Yield | 1127.05% |
| Dividend Growth Rate (5Y) | 5.98% |
| Debt-to-Equity Ratio | 0.04 |
To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:
| Valuation Method | Weight | Weighted Value |
|---|---|---|
| Discounted Cash Flow (10Y) | 30% | $35.22 |
| Discounted Cash Flow (5Y) | 25% | $27.41 |
| Dividend Discount Model (Multi-Stage) | 20% | $25.21 |
| Dividend Discount Model (Stable) | 15% | $18.91 |
| Earnings Power Value | 10% | $1.77 |
| Weighted Average | 100% | $108.52 |
Based on our comprehensive valuation analysis, Henderson Far East Income Ltd's weighted average intrinsic value is $108.52, which is approximately 49.3% below the current market price of $214.00.
Key investment considerations:
Given these factors, we believe Henderson Far East Income Ltd is currently significantly overvalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.