Valuation of NKT Holding A/S

Allan Andreasen

Student thesis: Master thesis


The purpose of this thesis is to find the fair value of NKT Holding A/S as of the Oct 1, 2013. The analysis is based on publicly available information only. The analysis will be based on both a strategic analysis and a financial analysis of the different parts of the company followed by the valuation. In the strategic analysis the three business units NKT Cables, Nilfisk-Advance and Photonics Group will be analyzed seperately as the nature of them are very different from eachother. NKT Cables have in later years invested to increase capacity. But right now they are suffering from increased competition and overcapacity in the Northern European market which puts a pressure on prices. At the same time fewer of the large offshore projects come through due to political uncertainties. NKT Cables are meeting this situation by trying to adapt prodution facilities and become more competitive. Nilfisk-Advance is benefitting from a very effective business model with high operational gearing. Even now in a low growth environment Nilfisk- Advance delivers earnings growth. Their focus is on expanding business on the existing platforms by acquisition and increased presence world wide. Photonics Group are in an industrialization phase and they experience growth in most business areas. The financial analysis is based on the consolidated income statements and balance sheets. NKT Holding A/S has experienced decreasing ROIC through the analysis period. A decomposition of ROIC shows that the turnover rate on invested capital falls back primarily due to overcapacity in the cables industry. The decreasing profitability in the consolidated holdings can in general be attributed to the challenges in NKT Cables. The valuation of NKT Holding A/S is performed applying a DCF model and the fair value of the company is DKK 248,65. The value was checked by performing a second valuation through the residal income model and the result matched the first one. A final sensitivity analysis indicates that the value is sensitive to changes in beta and WACC and a bit less sensitive to changes in the long-term stable growth rate.

EducationsMSc in Finance and Strategic Management, (Graduate Programme) Final Thesis
Publication date2014
Number of pages96