Værdiansættelse af IC Companys

Pardip Singh

Student thesis: Master thesis

Abstract

The main purpose of this thesis was to give answer the question "What should the price for an IC Companys A/S share be on 17 august 2011?" In order to answer this question I have analyzed the internal and external factors which has an influence on the Company's financial performance. This has been combined, with an analysis of the Company's financial statements, in order to estimate the future budget for the Company and the subsequent valuation of the share price. The history has showed, that share price has varied enormously over its short lifespan. The main reason for this has been the continuing struggles in the upper management to create growth in turnover and profit, which in turn has meant multiple layoffs of the management and members of the board. The strategic analysis showed that the main strength of the Company is their Multibrandstrategy, which consist of 11 independent clothing brands, whose only responsibility is designing and marketing their respective brands. In order to exploit the economies of scale the Company has a common platform for HR, outsourcing, finance and administration etc, in order for each brand to only concentrate on its brand specific characteristics. The financial statements analysis showed that the financial crisis has had a vast effect on the Company's financial performance. Due to decline in turnover the Company began analysis the costs in order to downsizing them. The downsizing has had a positive effect, as the return on invested capital has increased during the crisis. However the return on equity hasn't followed the same direction. This is due to the fact that the Company in reason years has focused on reducing foreign capital, which in prior years was a main factor in a strong financial performance, due to the Company's abilities to increase value through borrowing of capital. Based on the analysis, the DFC model was used in order to estimate the value of the IC Companys share price. In order to estimate the share price, the discounted rate was calculated - which was based on the share holders' required rate of return and the after-tax cost of foreign capital. This resulted in a WACC of 8.11 %. Hence the result showed that IC Companys share price should be traded for DKK 187.32 kr. Furthermore the sensitivity analysis showed that a change in the beta-value and gross-% has an immense impact on the value of the share price. Compared to the marked price of DKK 160 kr. on 17 august 2011, it is my conclusion that it is recommendable to buy shares in IC Companys.

EducationsMSc in Auditing, (Graduate Programme) Final Thesis
LanguageDanish
Publication date2012
Number of pages96