Bahamas Waste Limited

A debt-free, dividend-paying domestic waste utility that the local market prices like a bond, and prices richly. To a global investor charging the full Bahamas country risk premium, fair value is about $4.62 against a $10.26 price, roughly 55% below the tape. What makes BWL unusual is that it looks expensive even to a domestic investor who charges no country premium at all. On that lower 7.2% discount rate fair value is still only about $7.83, about 24% below the price. This is one of the few names bid above both fair values.

1. Expensive on both lenses. To a global investor charging the full 5.13% premium, fair value is about $4.62, roughly 55% below the $10.26 price. To a domestic investor charging no premium at all, it is about $7.83, still about 24% below. Most BISX names are fairly valued to a local buyer. BWL is not.
2. The market prices it like a bond, not a business. Debt-free, defensive, and income-like, BWL is prized locally for safety, and that demand has pushed it to premium multiples a low-growth utility cannot support even at the low domestic cost of capital. It trades around 26 times earnings.
3. Safety has a price, and this is above it. The country risk premium explains the gap to a global investor. The domestic gap is simpler still. Local investors are paying up for a scarce, safe, dividend-paying name beyond what even a no-premium discount rate justifies.