Strategisk analyse og værdiansættelse af TORM A/S

Christopher Andreasen

Student thesis: Master thesis


The primary objective of this thesis is to provide an equitable assessment of the value of TORM A/S, as of December 31th 2011. Thus this thesis is centered on answering the following questions: 1) Does the restructuring of TORM A/S create value for the shareholders, or would liquidation be preferable? 2) Does the restructuring create value for the creditors, converting a claim of 200 million USD to a 90% stake in TORM A/S? In order to acquire the necessary insight into the shipping sector, a comprehensive strategic analysis of the most important aspects influencing the future shipping market has been conducted. In the market, in which TORM operates (standard shipping industry), the pricing is solely determined by the relationship between supply and demand. Therefore methods of analysis include evaluating the future deliveries of new vessels and the expected scrapping of vessels with the purpose of presenting a realistic forecast of the future capacity in the market. By employing different demand forecasting approaches, it was possible to predict the future demand, and thereby evaluate the future relationship between supply and demand - the utilization rate. With the forecast of the future utilization rate the determination of the future freight rates was carried out. Subsequently, a financial analysis of TORM’s historical financial performance was provided in order to identify the main reasons for the urgent need of restructuring and to provide key ratios – these key ratios was later used in the financial forecast of TORMs activities. Furthermore I completed a risk analysis, which resulted in a rating of TORM and thus an assessment of the default risk, which contributed to the evaluation of TORMs cost of capital. To examine the findings from the strategic and financial analysis, a valuation was completed by utilizing three different approaches; 1) DCF and EVA-valuation, 2) valuation by using relevant multiples derived from a peer-group, and 3) liquidation valuation. The results from the valuations are listed in the figure below: The result from the going-concern scenario was significant higher than the benchmark of 1,06 DKK, which was the comparable stock price, why it was especially pertinent to complete a sensitivity analysis. The valuation from DCF was tested by altering several relevant drivers, and this analysis identified that the market value of TORM is greatly influenced by a change in utilization rates and freight rates. As the liquidation value of TORM is 0, it can be concluded that the restructuring creates value for the shareholders and that liquidation is not preferable. Moreover the analysis concluded that creditors, converting a 200 million USD claim to a 90% stake in TORM, create significant value from the transaction. According to the DCF valuation, the total value of a 90% stake is 786 million USD.

EducationsMSc in Finance and Accounting, (Graduate Programme) Final Thesis
Publication date2013
Number of pages105