Værdiansættelse af Norden: samt analyse af effekterne ved et opkøb af Star Bulk Carriers Corp

Joakim Christian Lindgren

Student thesis: Master thesis


The purpose of this thesis is to obtain a thorough knowledge of the shipping industry, in order to have best possible conditions for performing a comprehensive valuation of Norden, can be created. Using the DCF valuation model, the market equity value of Norden is estimated to a share price of 138 DKK. The market values Norden at 178 DKK, indicating market overvaluation, compared to the DCF model. The multiples EV/EBITDA and P/BOOK is used in a relative valuation model, obtaining results of a share price of 134 DKK based on median values, and 161 DKK based on mean values, then still reflecting an overvalued Norden. The strategic analysis helps identifying key factors, which drives the demand and supply in the shipping industry. Norden uses its flexible model, to operate in an unpredictable market based on cycles, correlating with the development in the world economy. Growth in world trade has previously been led by China and India, but a slowdown in these markets, has for some years made a deep impact in the industry. However freight rates are now showing signs of improvement, which could lead to a new recovery period. Financial analysis shows, that Norden in periods, characterized by growth and high rates, can create disproportionate ROIC values, whereas the consequence of the recent slowdown, has been several years of deficits. The source of earnings consists of general operations and gains from the purchase and sale of vessels. Historically Norden has had net financial assets, yielding lower than operations, resulting in an negative impact on ROE. Excess liquidity, however, sees to protect Norden in hard periods. Large fluctuations in freight rates results in volatile net operating assets, revenues and profits of Norden. Appropriate estimates of the future financials of Norden, has high priority in this thesis. Using computed correlations between value drivers and historical economic data, there is achieved greater precision and links between value drivers and future estimates. Segmented budgeting allows different conditions in respect of growth, sales and earnings for Bulk and Tank sections. Including a Business Cycle Multiplier, built around specific shipping market cycle conditions, aims to affect estimates in different cycle stages. The thesis analyses the acquisition opportunities of Norden, resulting in a screening process, which concludes, that Star Bulk is the right target. This match could create operational and financial synergies, affecting revenue growth, improved margins and capital structure optimization. Star Bulk is valued at an Enterprise Value of $1.085 billion, trading in the market at $1.173 billion. A new budget containing both Norden and Star Bulk shows a statement, witch summarized values the achievable positive and negative synergies at $372 million. Depending on the final take-overprice for Star Bulk, and deduction the cost of control and implementation, an acquisition could increase the value of Norden by $74 to $116 million.

EducationsMSc in Finance and Accounting, (Graduate Programme) Final Thesis
Publication date2015
Number of pages107