What is PHI.L's Intrinsic value?

Pacific Horizon Investment Trust PLC (PHI.L) Intrinsic Value Analysis

Executive Summary

As of May 31, 2025, Pacific Horizon Investment Trust PLC's estimated intrinsic value ranges from $912.90 to $912.90 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Dividend Discount Model (Stable) $912.90 +54.5%

Is Pacific Horizon Investment Trust PLC (PHI.L) undervalued or overvalued?

With the current market price at $591.00, 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 Pacific Horizon Investment Trust PLC's intrinsic value, including:

  1. Dividend Discount Model (DDM): Values the company based on expected future dividend payments

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 1.18 1.36
Cost of equity 11.0% 14.5%
Cost of debt 4.6% 4.6%
Tax rate 3.8% 6.4%
Debt/Equity ratio 1 1
After-tax WACC 7.7% 9.4%

Valuation Methods

2. Dividend Discount Model (DDM)

The DDM values a company based on its expected future dividend payments. We used two approaches:

Multi-Stage DDM:

  • Current payout ratio: 3.3%
  • Stable payout ratio: 90.0%
  • Growth transition: 5 years
  • Cost of equity: 12.8%
  • Long-term growth rate: 4.0%
  • Fair value: $-341.30 (-157.8% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 14.5% (Low) to 11.0% (High)
  • Long-term growth rate: 3.0% (Low) to 5.0% (High)
  • Fair value range: $530 to $1,295
  • Selected fair value: $912.90 (54.5% from current price)

Key Financial Metrics

Metric Value
Market Capitalization $493M
Enterprise Value $504M
Trailing P/E 6.79
Forward P/E 6.79
Trailing EV/EBITDA 5.45
Current Dividend Yield 48.18%
Dividend Growth Rate (5Y) 55.28%
Debt-to-Equity Ratio 0.03

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
Dividend Discount Model (Stable) 100% $136.93
Weighted Average 100% $912.90

Investment Conclusion

Based on our comprehensive valuation analysis, Pacific Horizon Investment Trust PLC's weighted average intrinsic value is $912.90, which is approximately 54.5% above the current market price of $591.00.

Key investment considerations:

  • Strong projected earnings growth (64% to -4664% margin)
  • Consistent cash flow generation
  • Conservative capital structure (Debt/Equity of 0.03)
  • Historical dividend growth of 55.28%

Given these factors, we believe Pacific Horizon Investment Trust PLC is currently significantly undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.