Strategisk analyse og værdiansættelse: Cimber Sterling

Troels Toft Sørensen & Claus Thuesen Beck

Student thesis: Master thesis


Cimber Sterling has been in the media spotlight as a result of its recent purchase of Sterling and an initial public offering. Attention has focused on the firm’s poor financial results and declining stock price. In light of such turbulent developments, the aim of the thesis is to determine the fair value of the stock as at September 15th, 2010. On this date the stock was valued at DKK 2.690. The foundation of the valuation is a strategic and financial statement analysis, which allows for a forecast of future growth and costs. Based on the forecast the value of the Cimber Sterling stock is then calculated. The strategic analysis examines how Cimber Sterling has grown significantly in recent years, and also explores how the firm has faced the dual headwinds of decreasing prices and downward pressure on profitability in a fiercely competitive airline industry. With this position in mind, the financial analysis centers on a company that, over the period of study, has been unable to deliver profitable results, and the profitability analysis reveals a short-term need for liquidity. However, the forecast estimates continued growth and a decrease in operating expenses, which leads Cimber Sterling back to profitability in 2012. Based on the forecast the residual income valuation model estimates the fair value at September 15th to be DKK 3.625. Similarly, the discounted cash flow-model estimates the same value, thus strengthening the reliability of the conclusion that the stock on September 15th was underpriced by 34.76%. The P/E multiple is used to perform a sanity check. Given the company’s financial situation, the valuation is further supplemented with a calculation of the liquidation value and a valuation model adjusting for the risk of default. Lastly, the robustness of the estimated share value is tested through a sensitivity analysis. This analysis reveals that although the estimated value is only slightly sensitive to changes in future growth, it is highly sensitive to the anticipated cuts in operating expenses.

EducationsMSc in Finance and Accounting, (Graduate Programme) Final Thesis
Publication date2010
Number of pages136