What is SES.ST's Intrinsic value?

Scandinavian Enviro Systems AB (SES.ST) Intrinsic Value Analysis

Executive Summary

As of May 22, 2025, Scandinavian Enviro Systems AB's estimated intrinsic value ranges from $1.20 to $5.14 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Dividend Discount Model (Multi-Stage) $1.20 +43.0%
Dividend Discount Model (Stable) $5.14 +515.4%

Is Scandinavian Enviro Systems AB (SES.ST) undervalued or overvalued?

With the current market price at $0.84, 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 Scandinavian Enviro Systems AB'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 2.5% 3.0%
Equity market risk premium 5.1% 6.1%
Adjusted beta 0.27 0.34
Cost of equity 5.4% 7.1%
Cost of debt 4.0% 33.4%
Tax rate 20.6% 20.9%
Debt/Equity ratio 0 0
After-tax WACC 5.4% 7.2%

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: 0.0%
  • Stable payout ratio: 90.0%
  • Growth transition: 5 years
  • Cost of equity: 6.2%
  • Long-term growth rate: 4.0%
  • Fair value: $1.20 (43.0% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 7.1% (Low) to 5.4% (High)
  • Long-term growth rate: 3.0% (Low) to 4.9% (High)
  • Fair value range: $1 to $9
  • Selected fair value: $5.14 (515.4% from current price)

Key Financial Metrics

Metric Value
Market Capitalization $935M
Enterprise Value $864M
Trailing P/E 17.44
Forward P/E 51.82
Trailing EV/EBITDA 7.20
Current Dividend Yield 62.96%
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
Dividend Discount Model (Multi-Stage) 57% $0.24
Dividend Discount Model (Stable) 43% $0.77
Weighted Average 100% $2.89

Investment Conclusion

Based on our comprehensive valuation analysis, Scandinavian Enviro Systems AB's weighted average intrinsic value is $2.89, which is approximately 245.4% above the current market price of $0.84.

Key investment considerations:

  • Strong projected earnings growth (31% to 26% margin)
  • Consistent cash flow generation
  • Conservative capital structure (Debt/Equity of 0.00)

Given these factors, we believe Scandinavian Enviro Systems AB is currently significantly undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.