Værdiansættelse af Vestas Wind System A/S

Tina Braad Hansen

Student thesis: Master thesis


The purpose of this analysis is to value Vestas Wind Systems A/S in order to find out if the stock is priced correctly relative to the market price, and whether Vestas is an attractive investment. The valuation is based on a strategic analysis and a accounting analysis, and from these there is prepared a budget and estimated a cost of capital, which will be used in the accounting-based valuation models DCF and EVA. The strategic analysis shows that Vestas has a good foundation of strengths and few weaknesses. The main strengths include the following: a wide product portfolio, a strong global presence, an increased awareness of quality and large technological know-how. These strengths are be important competitive advantages in the global wind market, where the competition in recent years has become tougher and prices have started to fall due to Asian wind turbine manufacturers. Vestas was the largest wind turbine manufacturer in 2009, but their market share has declined since 2004 and it will therefore become harder for Vestas in the future to keep a leading position in the market. The global market growth is strongly depending on policy initiatives which can stimulate the demand for renewable energy. The market growth is currently affected by the following facts: the economic crisis, the fact that there are no global climate agreement which can replace the Kyotoagreement and the low gas prices especially in the U.S. The accounting analysis shows that Vestas from 2005-2007 has had an increased profitability. From 2007 until 2009, ROIC has experienced a sharp decline due to an inefficient use of the invested capital. In spite of this, Vestas had an increased operating margin in the past 5 years, due to increased profit margins. Vestas has throughout the period had a very low debt ratio, and a negative gearing effect has prevented ROE to rise above the level of ROIC. These fundamental factors have formed the basis for the budget in the valuation, and based on a calculated cost of capital at 10.29%, the fair value was estimated at 315 Dkr. from a base scenario point of view. The fair value drops to 202 Dkr. if the fair value was valued from a worst case scenario and increases to 537 Dkr. from a best case scenario. The valuation, based on the DCF and EVA model, clearly shows that the market price at 167 Dkr. underestimates the true value of Vestas. The same conclusion can be derived from a P/E analysis, which estimates the value at 310 Dkr. based on an average of the peer group.

EducationsMSc in Finance and Accounting, (Graduate Programme) Final Thesis
Publication date2010
Number of pages141