Kin and Carta PLC (KCT.L) Intrinsic Value Analysis

Executive Summary

As of June 8, 2025, Kin and Carta PLC's estimated intrinsic value ranges from $76.69 to $172.96 per share, depending on the valuation methodology applied.

Valuation Method	Fair Value (USD)	Implied Upside/Downside
Discounted Cash Flow (10Y)	$76.69	-40.8%
Earnings Power Value	$172.96	+33.5%

Is Kin and Carta PLC (KCT.L) undervalued or overvalued?

With the current market price at $129.60, 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 Kin and Carta PLC's intrinsic value, including:

1. Discounted Cash Flow (DCF): Values the company based on projected future cash flows
2. Earnings Power Value (EPV): Values the company based on its current earnings power, assuming no growth

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	0.38	0.51
Cost of equity	6.3%	8.6%
Cost of debt	4.0%	7.1%
Tax rate	8.5%	9.7%
Debt/Equity ratio	0.18	0.18
After-tax WACC	5.9%	8.3%

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: 10-year DCF
• Terminal Growth Rate: 0.0% (range: 3.0% - 5.0%)
• Discount Rate: 7.1% (range: 0.0% - 9.3%)

Key Projections:

• Revenue growth from $192 (FY07-2023) to $329 (FY07-2033)
• Net profit margin expansion from -10% to 3%
• Capital expenditures maintained at approximately 1% of revenue

DCF Model	Fair Value	Enterprise Value	% from Terminal Value
5-Year Growth	$(1,234)	$(45)M	14.5%
10-Year Growth	$77	$167M	107.7%
5-Year EBITDA	$(1,234)	$(25)M	51.0%
10-Year EBITDA	$(1,234)	$26M	148.9%

3. Earnings Power Value (EPV)

EPV assesses a company's value based on its current normalized earnings power, assuming no growth.

EPV Component	Value
Normalized Earnings	$23M
Discount Rate (WACC)	8.3% - 5.9%
Enterprise Value	$282M - $395M
Net Debt	$31M
Equity Value	$251M - $364M
Outstanding Shares	2M
Fair Value	$141 - $205
Selected Fair Value	$172.96

Key Financial Metrics

Metric	Value
Market Capitalization	$231M
Enterprise Value	$261M
Trailing P/E	0.00
Forward P/E	0.00
Trailing EV/EBITDA	4.35
Current Dividend Yield	0.13%
Dividend Growth Rate (5Y)	-82.20%
Debt-to-Equity Ratio	0.18

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)	75%	$23.01
Earnings Power Value	25%	$17.30
Weighted Average	100%	$100.76

Investment Conclusion

Based on our comprehensive valuation analysis, Kin and Carta PLC's weighted average intrinsic value is $100.76, which is approximately 22.3% below the current market price of $129.60.

Key investment considerations:

• Strong projected earnings growth (-10% to 3% margin)
• Consistent cash flow generation
• Conservative capital structure (Debt/Equity of 0.18)

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