Valuation of SalMar ASA

René Nicholas Kabel Laursen

Student thesis: Master thesis


This thesis has been written with the intention of finding the intrinsic value of SalMar ASA, by means of mainly using the discounted cash flow and the EVA models, based on assumptions made through a financial and a strategic analysis. A peer valuation is also made to act as a sanity check for the former two models, although the two primary valuation models will be further tested for sensitivity in a separate section. SalMar ASA is a Norwegian salmon farming and processing company. In the recent decade the company, the salmon farming industry as well as the wider aquaculture industry have seen substantial growth rates. This has meant that the focus on the industry from investors’ interest for the industry has also increased. SalMar has been highly regarded within the industry as the most innovative and cost efficient producer of salmon in the world, however, as the fundamental analysis reveals, in recent years SalMar has lost some of the historical superiority due to biological issues and higher than expected raw material costs. Therefore, the company has now initiated several initiatives to regain its former number one position. Using a WACC of 6,0%, the primary valuation models estimate an intrinsic value of NOK 73,49 on 30 April 2013, indicating 27% premium to the market price of the share. This premium is due to the author’s positive view on the company’s abilities to cut operating costs in addition to the rising salmon price throughout the forecasting horizon. The peer valuations indicate a valuation range between NOK 44 and NOK 79, leaving the estimate of NOK 73,49 in the higher end of the range. This also verifies the intrinsic value derived by the primary valuation models.

EducationsMSc in Accounting, Strategy and Control, (Graduate Programme) Final Thesis
Publication date2013
Number of pages110