What is LCK.AX's Intrinsic value?

Leigh Creek Energy Ltd (LCK.AX) Intrinsic Value Analysis

Executive Summary

As of June 17, 2025, Leigh Creek Energy Ltd's estimated intrinsic value ranges from $0.01 to $0.02 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Discounted Cash Flow (10Y) $0.01 -92.6%
Discounted Cash Flow (5Y) $0.02 -87.3%

Is Leigh Creek Energy Ltd (LCK.AX) undervalued or overvalued?

With the current market price at $0.17, 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 Leigh Creek Energy 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 3.7% 4.2%
Equity market risk premium 4.7% 5.7%
Adjusted beta 0.97 1.08
Cost of equity 8.3% 10.9%
Cost of debt 5.0% 5.0%
Tax rate 30.0% 30.0%
Debt/Equity ratio 0 0
After-tax WACC 8.3% 10.9%

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: 9.6% (range: 0.0% - 9.3%)

Key Projections:

  • Revenue growth from $0 (FY06-2021) to $0 (FY06-2031)
  • Net profit margin expansion from -530241% to -53%
  • Capital expenditures maintained at approximately 36661% of revenue
DCF Model Fair Value Enterprise Value % from Terminal Value
5-Year Growth $0 $11M 22.9%
10-Year Growth $0 $3M 131.4%

Key Financial Metrics

Metric Value
Market Capitalization $152M
Enterprise Value $143M
Trailing P/E 0.00
Forward P/E 0.00
Trailing EV/EBITDA 0.00
Current Dividend Yield 0.00%
Dividend Growth Rate (5Y) 0.00%
Debt-to-Equity Ratio 0.00

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% $0.00
Discounted Cash Flow (5Y) 45% $0.01
Weighted Average 100% $0.02

Investment Conclusion

Based on our comprehensive valuation analysis, Leigh Creek Energy Ltd's weighted average intrinsic value is $0.02, which is approximately 90.2% below the current market price of $0.17.

Key investment considerations:

  • Strong projected earnings growth (-530241% to -53% margin)
  • Conservative capital structure (Debt/Equity of 0.00)

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