Strategisk regnskabsanalyse og værdiansættelse af Ambu A/S

Marc Murphy Bruun

Student thesis: Master thesis


This thesis concerns the valuation of Ambu A/S (Ambu), which is based on an investor’s point of view. The final date for including news is 17 August 2009. Ambu develops, produces, and markets diagnostic, life-supporting equipment, and solutions to hospitals and rescue services, with the US and Western Europe as its main markets. The company is divided into five strategic business units (SBUs), which are Respiratory Care, Cardiology, Neurology, Training, and Immobilization. Overall, the external factors affecting the valuation are: Underlying tendencies in the society, which consists of increasing number of people with lifestyle related diseases, a growing population of elderly, increasing public health expenditures, and increasing use of disposable medical devices. All of these have a positive effect on Ambu’s business. Within the medtech industry there are a number of threats and opportunities that are of special importance for Ambu. These were identified using Porter’s Five Forces and Through a SWOT analysis. The intensity of the rivalry in the industry is largely affected by the increasing number of Group Purchasing Organisations (GPOs), which are becoming more powerful with regards to negotiation of volume and price. Ambu, which is a non-cyclical company, has overcome this threat for now by off shoring the production to China and Malaysia, and thereby efficiently reducing its production costs. This thesis has identified three main factors that are of great importance to Ambu’s future value, and, if succeeding, can determine the growth of the company to a great extent: • R&D strategy: shorter time-to-market in general, and products in pipeline with larger potential. • Market development and penetration: introduction on emerging markets (e.g. in China and Russia), and focus on increased investments in sales on existing markets. • Future acquisitions: Ambu has a high solvency, which gives an opportunity to buying a significant player in the market without increasing the risk too much. A top down analysis of Ambu’s financial situation was done by decomposing Return on Equity (ROE), which is an average of approximately 11 percent. Fluctuations in ROIC is the reason for changes in ROE over time. ROIC is mainly influenced by flagging sales and fluctuations in exchange rates, including the USD. With respect to above market conditions, opportunities, and the financial situation, an explicit budget period of nine years plus a terminal period in the 10th year was laid out in great detail to ensure a realistic free cash flow (FCF) in the future. The FCF was discounted using the DCF-model and a WACC of 7.91 percent to arrive at a present value of 2,576,558 mill. DKK, which is equal to a value of 200 DKK per share. In comparison with the actual quote of 97 DKK on 17 August 2009, the calculated fair value seems to be very high. There are of course uncertainties in the valuation model and in the underlying conditions, and therefore a sensitivity analysis was carried out. A worst case scenario, with a 10 percent drop in revenues and a 10 percent increase in expenses was calculated to get a new share price of 83 DKK. This being said, the actual share price seems to be undervalued even though some uncertainties might exist.

EducationsMSc in Auditing, (Graduate Programme) Final Thesis
Publication date2009
Number of pages110