What is LBOW.L's Intrinsic value?

ICG Longbow Senior Secured UK Property Debt Investments Ltd (LBOW.L) Intrinsic Value Analysis

Executive Summary

As of June 18, 2025, ICG Longbow Senior Secured UK Property Debt Investments Ltd's estimated intrinsic value ranges from $46.26 to $46.26 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Earnings Power Value $46.26 +89.6%

Is ICG Longbow Senior Secured UK Property Debt Investments Ltd (LBOW.L) undervalued or overvalued?

With the current market price at $24.40, 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 ICG Longbow Senior Secured UK Property Debt Investments Ltd's intrinsic value, including:

  1. 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 0.67 0.99
Cost of equity 8.0% 11.9%
Cost of debt 5.0% 5.0%
Tax rate 19.0% 19.0%
Debt/Equity ratio 1 1
After-tax WACC 6.0% 8.0%

Valuation Methods

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 $3M
Discount Rate (WACC) 8.0% - 6.0%
Enterprise Value $42M - $55M
Net Debt $(3)M
Equity Value $45M - $58M
Outstanding Shares 1M
Fair Value $40 - $52
Selected Fair Value $46.26

Key Financial Metrics

Metric Value
Market Capitalization $27M
Enterprise Value $24M
Trailing P/E 0.00
Forward P/E 0.00
Trailing EV/EBITDA 7.45
Current Dividend Yield 0.00%
Dividend Growth Rate (5Y) -100.00%
Debt-to-Equity Ratio 0.92

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
Earnings Power Value 100% $4.63
Weighted Average 100% $46.26

Investment Conclusion

Based on our comprehensive valuation analysis, ICG Longbow Senior Secured UK Property Debt Investments Ltd's weighted average intrinsic value is $46.26, which is approximately 89.6% above the current market price of $24.40.

Key investment considerations:

  • Strong projected earnings growth (-105% to -83% margin)
  • Consistent cash flow generation

Given these factors, we believe ICG Longbow Senior Secured UK Property Debt Investments Ltd is currently significantly undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.