Strategisk analyse og værdiansættelse af Rockwool International A/S

Jacob Christian Nielsen & Mikkel Bigum Hansen

Student thesis: Diploma thesis


The purpose of this thesis is to complete an analysis and valuation of Danish insulation company Rockwool International A/S and to reach a conclusion on whether the official closing stock price on August 24th 2011 is over- or underestimated in comparison to the estimated fair value calculated in this thesis. Rockwool is the largest stone wool manufacturer in the world with a turnover of 11.732 MDKK in 2010. The valuation is made through analysis of Rockwool’s external environment, internal situation and financial reports. The external environment analysis was performed with the use of the PEST(EL)-model and Porter’s five forces, and through these we got a good view to how the market situation is in the insulation business. We could conclude that the market is attractive and has a lot of potential, politicians are eager to reduce CO2 emission, by renovation of buildings, and simultaneously kick start the economy and create new jobs. Even though the building business still isn´t recovered completely from the economic crisis, it is getting better, and our analysis show that climate treaties and legislation will help it. The competitive intensity of the insulation industry has been identified as intense, since there are many providers and some are large, and the market has experienced decline. Rockwool’s internal strengths and weaknesses revealed to be a strong advantage in their innovations and especially in their expert advisory department “BuildDesk”. BuildDesk provides guidance to customers which most of the competitors do not offer. Rockwool’s biggest problem showed to be capacity adjustment; they either could not keep up with demand or have had excess capacity. The financial analysis showed that Rockwool had great turnover until 2007 and a large decline in 2008, since has the result increased but not nearly to the result from 2007. In addition, we could see that Rockwool’s earnings are driven by their core activity. The findings from the strategic analysis and financial analysis form the basis of our assumptions in budgeting. The future budgeting serves as the basis for our valuation, in estimating the value of future free cash flows and the weighted cost of capital which is used in calculating the closing stock prices. Our estimated market value of Rockwool is 14,315 MDKK, equivalent to 651.40 DKK for each stock. The overall conclusion of this thesis is that Rockwool's official share price August 24th 2011 was underestimated by 148.54 DKK or approx. 30%.

EducationsGraduate Diploma in Financial and Management Accounting, (Diploma Programme) Final Thesis
Publication date2011
Number of pages103