Trinity Exploration and Production PLC (TRIN.L) Intrinsic Value Analysis

Executive Summary

As of May 22, 2025, Trinity Exploration and Production PLC's estimated intrinsic value ranges from $8.09 to $309.14 per share, depending on the valuation methodology applied.

Valuation Method	Fair Value (USD)	Implied Upside/Downside
Discounted Cash Flow (10Y)	$8.09	-88.1%
Earnings Power Value	$309.14	+354.6%

Is Trinity Exploration and Production PLC (TRIN.L) undervalued or overvalued?

With the current market price at $68.00, 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 Trinity Exploration and Production PLC's intrinsic value, including:

1. Discounted Cash Flow (DCF): Values the company based on projected future cash flows
2. 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	4.0%	4.5%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.38	0.62
Cost of equity	6.3%	9.3%
Cost of debt	4.6%	7.6%
Tax rate	19.0%	19.0%
Debt/Equity ratio	0.12	0.12
After-tax WACC	6.0%	8.9%

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: 10-year DCF
• Terminal Growth Rate: 0.0% (range: 3.0% - 5.0%)
• Discount Rate: 7.5% (range: 0.0% - 9.3%)

Key Projections:

• Revenue growth from $70 (FY12-2023) to $92 (FY12-2033)
• Net profit margin expansion from -10% to 2%
• Capital expenditures maintained at approximately 18% of revenue

DCF Model	Fair Value	Enterprise Value	% from Terminal Value
5-Year Growth	$(1,234)	$(41)M	69.4%
10-Year Growth	$11	$(1)M	801.3%
5-Year EBITDA	$29	$6M	321.0%
10-Year EBITDA	$30	$6M	288.9%

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	$11M
Discount Rate (WACC)	8.9% - 6.0%
Enterprise Value	$123M - $184M
Net Debt	$(5)M
Equity Value	$129M - $190M
Outstanding Shares	0M
Fair Value	$332 - $489
Selected Fair Value	$309.14

Key Financial Metrics

Metric	Value
Market Capitalization	$26M
Enterprise Value	$22M
Trailing P/E	0.00
Forward P/E	0.00
Trailing EV/EBITDA	2.10
Current Dividend Yield	65.91%
Dividend Growth Rate (5Y)	0.00%
Debt-to-Equity Ratio	0.12

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)	75%	$2.43
Earnings Power Value	25%	$30.91
Weighted Average	100%	$83.35

Investment Conclusion

Based on our comprehensive valuation analysis, Trinity Exploration and Production PLC's weighted average intrinsic value is $83.35, which is approximately 22.6% above the current market price of $68.00.

Key investment considerations:

• Strong projected earnings growth (-10% to 2% margin)
• Conservative capital structure (Debt/Equity of 0.12)

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