What is SGN.WA's Intrinsic value?

Sygnity SA (SGN.WA) Intrinsic Value Analysis

Executive Summary

As of June 17, 2025, Sygnity SA's estimated intrinsic value ranges from $30.15 to $61.68 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Discounted Cash Flow (10Y) $61.68 -40.1%
Discounted Cash Flow (5Y) $56.17 -45.5%
Dividend Discount Model (Multi-Stage) $41.22 -60.0%
Dividend Discount Model (Stable) $39.37 -61.8%
Earnings Power Value $30.15 -70.7%

Is Sygnity SA (SGN.WA) undervalued or overvalued?

With the current market price at $103.00, 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 Sygnity 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 5.5% 6.0%
Equity market risk premium 6.3% 7.3%
Adjusted beta 0.48 0.53
Cost of equity 8.5% 10.4%
Cost of debt 4.4% 6.1%
Tax rate 12.0% 14.5%
Debt/Equity ratio 0.01 0.01
After-tax WACC 8.5% 10.3%

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: 9.4% (range: 0.0% - 9.3%)

Key Projections:

  • Revenue growth from $293 (FY12-2024) to $490 (FY12-2034)
  • Net profit margin expansion from 21% to 26%
  • Capital expenditures maintained at approximately 2% of revenue
DCF Model Fair Value Enterprise Value % from Terminal Value
5-Year Growth $56 $1,163M 74.8%
10-Year Growth $62 $1,289M 56.3%
5-Year EBITDA $38 $752M 61.0%
10-Year EBITDA $47 $947M 40.5%

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: 9.5%
  • Long-term growth rate: 3.0%
  • Fair value: $41.22 (-60.0% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 10.4% (Low) to 8.5% (High)
  • Long-term growth rate: 2.0% (Low) to 4.0% (High)
  • Fair value range: $23 to $55
  • Selected fair value: $39.37 (-61.8% 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 $53M
Discount Rate (WACC) 10.3% - 8.5%
Enterprise Value $515M - $627M
Net Debt $(115)M
Equity Value $630M - $742M
Outstanding Shares 23M
Fair Value $28 - $33
Selected Fair Value $30.15

Key Financial Metrics

Metric Value
Market Capitalization $2344M
Enterprise Value $2229M
Trailing P/E 36.85
Forward P/E 33.65
Trailing EV/EBITDA 6.65
Current Dividend Yield 0.59%
Dividend Growth Rate (5Y) 0.00%
Debt-to-Equity Ratio 0.01

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% $18.50
Discounted Cash Flow (5Y) 25% $14.04
Dividend Discount Model (Multi-Stage) 20% $8.24
Dividend Discount Model (Stable) 15% $5.91
Earnings Power Value 10% $3.02
Weighted Average 100% $49.71

Investment Conclusion

Based on our comprehensive valuation analysis, Sygnity SA's weighted average intrinsic value is $49.71, which is approximately 51.7% below the current market price of $103.00.

Key investment considerations:

  • Strong projected earnings growth (21% to 26% margin)
  • Consistent cash flow generation
  • Conservative capital structure (Debt/Equity of 0.01)

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