What is ISH.CN's Intrinsic value?

Inner Spirit Holdings Ltd (ISH.CN) Intrinsic Value Analysis

Executive Summary

As of May 27, 2025, Inner Spirit Holdings Ltd's estimated intrinsic value ranges from $0.02 to $0.08 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Discounted Cash Flow (10Y) $0.08 -80.0%
Discounted Cash Flow (5Y) $0.02 -94.0%

Is Inner Spirit Holdings Ltd (ISH.CN) undervalued or overvalued?

With the current market price at $0.38, the stock appears to be significantly 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 Inner Spirit Holdings Ltd's intrinsic value, including:

  1. Discounted Cash Flow (DCF): Values the company based on projected future cash flows

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 0.94 1.03
Cost of equity 7.8% 10.3%
Cost of debt 7.0% 7.0%
Tax rate 26.5% 26.5%
Debt/Equity ratio 0.24 0.24
After-tax WACC 7.3% 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: 8.3% (range: 0.0% - 9.3%)

Key Projections:

  • Revenue growth from $27 (FY12-2020) to $39 (FY12-2030)
  • Net profit margin expansion from -12% to 2%
  • Capital expenditures maintained at approximately 16% of revenue
DCF Model Fair Value Enterprise Value % from Terminal Value
5-Year Growth $0 $21M 102.8%
10-Year Growth $0 $36M 78.4%
5-Year EBITDA $1 $368M 100.2%
10-Year EBITDA $1 $367M 97.9%

Key Financial Metrics

Metric Value
Market Capitalization $108M
Enterprise Value $122M
Trailing P/E 0.00
Forward P/E 0.00
Trailing EV/EBITDA 81.50
Current Dividend Yield 0.00%
Dividend Growth Rate (5Y) 0.00%
Debt-to-Equity Ratio 0.24

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
Discounted Cash Flow (10Y) 55% $0.02
Discounted Cash Flow (5Y) 45% $0.01
Weighted Average 100% $0.05

Investment Conclusion

Based on our comprehensive valuation analysis, Inner Spirit Holdings Ltd's weighted average intrinsic value is $0.05, which is approximately 86.4% below the current market price of $0.38.

Key investment considerations:

  • Strong projected earnings growth (-12% to 2% margin)
  • Consistent cash flow generation
  • Conservative capital structure (Debt/Equity of 0.24)

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