Terminalværdien og Monte Carlo Simulering: En værdiansættelse af Hugo Boss AG

Mathias Trustrup Lundberg

Student thesis: Master thesis


The purpose of this master thesis is to estimate the equity value of Hugo Boss and thereafter to perform an investigation of which assumptions the general stock market is applying to justify the valuation of EUR 93,84 per 1st of September 2013. The investigation is divided into five parts. The first part is a strategic analysis of Hugo Boss and the fashion industry. The second part is a financial performance review and comparison with a peer group. The third part consolidates the strategic and financial value drivers to evaluate Hugo Boss’ market position and form a forecast. The fourth part is the valuation with a special focus on the terminal value. The fifth part is a Monte Carlo Simulation- sensitivity analysis and a more thorough investigation of which assumptions the stock market is applying to justify the current valuation. The UK based private equity Permira acquired Hugo Boss in 2007 and initiated a transformation of Hugo Boss from a wholesale to retail based clothing manufacturer. The strong brand and the transformation process has already had severe impact on Hugo Boss’ financial performance and Hugo Boss has almost closed the profitability gap to the peer group. The DCF valuation of Hugo Boss estimates a stock price of EUR 93,31 which indicates the current stock market valuation is correct when applying the Gordon growth formula to determine the terminal value. This implies that the stock market is assuming that Hugo Boss can generate supernormal return in al eternity. The alternative approach to calculating the terminal value is discarded as possible alternatives as they yield lower valuation than implied by the multiple valuation. The Monte Carlo simulation finds that the forecasted valuation is around the 85% percentile of what the simulation predicts. A decomposing of the simulation shows that the forecasted value drivers will convergence to the 90% percentile, which indicates an optimistic forecast. Furthermore the valuation is most sensitive to changes in the cost of capital (WACC) where beta and the risk-free rate are the most sensible input factors. It is the risk-free rate that differs the most from the valuation to the simulation. It can be inferred that the risk-free rate in the valuation is discounting the optimistic budget with a too high risk-free rate while the simulation is applying an even higher risk-free rate expanding the discount. On that basis it can be inferred that the stock market applies a current risk-free rate, which yields a stock price of EUR 109, and this is more consistent with the simulation of the value drivers.

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