What is RDL.WA's Intrinsic value?

Radpol SA (RDL.WA) Intrinsic Value Analysis

Executive Summary

As of June 2, 2025, Radpol SA's estimated intrinsic value ranges from $1.03 to $1.41 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Discounted Cash Flow (10Y) $1.36 -29.2%
Discounted Cash Flow (5Y) $1.05 -45.7%
Dividend Discount Model (Multi-Stage) $1.12 -41.6%
Dividend Discount Model (Stable) $1.41 -26.9%
Earnings Power Value $1.03 -46.4%

Is Radpol SA (RDL.WA) undervalued or overvalued?

With the current market price at $1.93, 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 Radpol SA's intrinsic value, including:

  1. Discounted Cash Flow (DCF): Values the company based on projected future cash flows
  2. Dividend Discount Model (DDM): Values the company based on expected future dividend payments
  3. 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 7.2% 7.7%
Equity market risk premium 5.6% 6.6%
Adjusted beta 0.73 0.77
Cost of equity 11.3% 13.3%
Cost of debt 4.6% 7.9%
Tax rate 19.5% 20.7%
Debt/Equity ratio 0.27 0.27
After-tax WACC 9.7% 11.8%

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: 10.7% (range: 0.0% - 9.3%)

Key Projections:

  • Revenue growth from $133 (FY12-2020) to $291 (FY12-2030)
  • Net profit margin expansion from 5% to 5%
  • Capital expenditures maintained at approximately 3% of revenue
DCF Model Fair Value Enterprise Value % from Terminal Value
5-Year Growth $1 $88M 69.8%
10-Year Growth $1 $108M 48.8%
5-Year EBITDA $2 $121M 78.0%
10-Year EBITDA $2 $132M 58.0%

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: 0.0%
  • Stable payout ratio: 90.0%
  • Growth transition: 5 years
  • Cost of equity: 12.3%
  • Long-term growth rate: 2.0%
  • Fair value: $1.12 (-41.6% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 13.3% (Low) to 11.3% (High)
  • Long-term growth rate: 1.0% (Low) to 3.0% (High)
  • Fair value range: $1 to $2
  • Selected fair value: $1.41 (-26.9% from current price)

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 $9M
Discount Rate (WACC) 11.8% - 9.7%
Enterprise Value $79M - $96M
Net Debt $22M
Equity Value $57M - $74M
Outstanding Shares 63M
Fair Value $1 - $1
Selected Fair Value $1.03

Key Financial Metrics

Metric Value
Market Capitalization $122M
Enterprise Value $144M
Trailing P/E 11.67
Forward P/E 14.33
Trailing EV/EBITDA 7.10
Current Dividend Yield 0.00%
Dividend Growth Rate (5Y) 0.00%
Debt-to-Equity Ratio 0.27

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) 30% $0.41
Discounted Cash Flow (5Y) 25% $0.26
Dividend Discount Model (Multi-Stage) 20% $0.22
Dividend Discount Model (Stable) 15% $0.21
Earnings Power Value 10% $0.10
Weighted Average 100% $1.21

Investment Conclusion

Based on our comprehensive valuation analysis, Radpol SA's weighted average intrinsic value is $1.21, which is approximately 37.2% below the current market price of $1.93.

Key investment considerations:

  • Strong projected earnings growth (5% to 5% margin)
  • Consistent cash flow generation
  • Conservative capital structure (Debt/Equity of 0.27)

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