What is YMHRE.MC's Intrinsic value?

Millenium Hotels Real Estate I SOCIMI SA (YMHRE.MC) Intrinsic Value Analysis

Executive Summary

As of June 18, 2025, Millenium Hotels Real Estate I SOCIMI SA's estimated intrinsic value ranges from $1.56 to $4.21 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Discounted Cash Flow (10Y) $4.21 +58.2%
Discounted Cash Flow (5Y) $2.35 -11.6%
Dividend Discount Model (Multi-Stage) $1.56 -41.3%
Dividend Discount Model (Stable) $1.82 -31.7%

Is Millenium Hotels Real Estate I SOCIMI SA (YMHRE.MC) undervalued or overvalued?

With the current market price at $2.66, the stock appears to be fairly valued.

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 Millenium Hotels Real Estate I SOCIMI 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

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 3.1% 3.6%
Equity market risk premium 7.4% 8.4%
Adjusted beta 0.52 0.83
Cost of equity 7.0% 11.1%
Cost of debt 4.0% 14.9%
Tax rate 25.0% 25.0%
Debt/Equity ratio 0.72 0.72
After-tax WACC 5.3% 11.1%

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: 8.2% (range: 0.0% - 9.3%)

Key Projections:

  • Revenue growth from $26 (FY12-2024) to $110 (FY12-2034)
  • Net profit margin expansion from 42% to 32%
  • Capital expenditures maintained at approximately 26% of revenue
DCF Model Fair Value Enterprise Value % from Terminal Value
5-Year Growth $2 $408M 77.3%
10-Year Growth $4 $623M 66.5%
5-Year EBITDA $4 $571M 83.8%
10-Year EBITDA $6 $876M 76.1%

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: 9.1%
  • Long-term growth rate: 3.0%
  • Fair value: $1.56 (-41.3% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 11.1% (Low) to 7.0% (High)
  • Long-term growth rate: 2.0% (Low) to 4.0% (High)
  • Fair value range: $1 to $3
  • Selected fair value: $1.82 (-31.7% from current price)

Key Financial Metrics

Metric Value
Market Capitalization $309M
Enterprise Value $443M
Trailing P/E 27.67
Forward P/E 27.10
Trailing EV/EBITDA 19.10
Current Dividend Yield 62.96%
Dividend Growth Rate (5Y) 0.00%
Debt-to-Equity Ratio 0.72

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) 33% $1.26
Discounted Cash Flow (5Y) 28% $0.59
Dividend Discount Model (Multi-Stage) 22% $0.31
Dividend Discount Model (Stable) 17% $0.27
Weighted Average 100% $2.71

Investment Conclusion

Based on our comprehensive valuation analysis, Millenium Hotels Real Estate I SOCIMI SA's weighted average intrinsic value is $2.71, which is approximately 1.7% above the current market price of $2.66.

Key investment considerations:

  • Strong projected earnings growth (42% to 32% margin)
  • Consistent cash flow generation

Given these factors, we believe Millenium Hotels Real Estate I SOCIMI SA is currently fairly valued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.