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Abstract:
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The complex structure of a conglomerate like NKT Holding A/S means in the eyes of an investor
that he/she seldom has a comprisable peer group for which the investor can assess the
company’s fair value. This in our eyes brings in front the necessity of a valuation.
The subject of this thesis has been to assess a fair value of a stock in NKT Holding A/S on
May 5. 2008 based on a strategic valuation of the company and the four subsidiaries: NKT
Cables, Nilfisk-Advance, NKT Photonics and the joint venture owned NKT Flexibles.
By means of a strategic analysis of the current market positions, the growth prospects of each
company were projected. On the basis of this analysis it was estimated that NKT Cables
would have a moderate growth-rate, based on the large percentage of NKT Cables turnover in
the low voltage segment and the link between the slowdown in the building and housing sector.
It was estimated that Nilfisk-Advance would have a growth rate slightly below the general
worldwide economics growth, based on the fear of companies cutting down on replacing industrial
cleaning equipments in times of economic slowdown. NKT Flexibles was estimated
to grow at a very high rate based on the unusually good structural conditions within the oildrilling
segment. NKT Photonics was estimated to grow at a very high rate based on the company’s
high R&D costs.
The analysis of the companies’ accounting-policy showed that their account overall is of a
very high standard and in accordance with the preferable practices for analytical purposes.
Thus, only a few corrections in their accounts were necessary.
The analysis of key accounting figures combined with the strategic analyze helped us to make
a budget for each of the four company’s turnover, which we summarized to a growth factor
for the holding company and used this as a discount factor.
On the basis of the aforementioned analyses NKT Holding were valued by the Discounted
Cash Flow & Economic Value Added Model that gave us a value of DKK 463,2 pr. share,
compared with the stock price at DKK 422 may. 5. We tested the models strengths and sensitive
against several factors her among changes in wacc, g and turnover.
Consequently the conclusions of the thesis on the basis of the market conditions at the given
time, and the modest upside from the traded price to the price we found were that we would
recommend a Hold recommendation. |
