Værdiansættelse og strategisk analyse af den tyske virksomhed Kontron

Lars K. Nielsen

Student thesis: Master thesis


The purpose of this thesis is to determine the fair value of the German company Kontron AG. This will be done using the discounted cash flow model. The value obtained using this theoretical correct model will be compared with a multiple EV/EBIT. A peer group valuation requires a sample group of comparable companies. This was done using a database called corporate focus screener. The company does business in seven segments: infotainment, telecom, automation, energy, medical, government, transportation. Except energy and telecom, the others are hurt be the crises. But in the future ECT business will likely see some double digit growth in revenue. The reason is that ordinary manufacturing companies will be forced to reduce manufacturing costs. One way to do this is by outsourcing non-core technology to Kontron and other ECT companies. After the strategy was laid out a budget was next. The budget will forecast the value drivers like EBIT margin, and also cost drivers. The Weighted average cost of capital (WACC) was estimated to 9.03 %. To get to that number I used a beta value of 1. This was found be common sense method and by comparing beta values from peer group companies. The ECT industry has relatively low beta values, some of the companies was below 1 including Kontron according to Bloomberg’s website. The value of the equity was 642 million euro which corresponds to a share price of 12.64. The Kontron share price is currently trading around 8 euro per share. That means that the company is undervalued about 37 %. The strategic analysis showed that Kontron AG is hurt by the current economic crises. Long term growth is expected to be positive. But it also showed that Kontron has a very broad product portfolio. Kontron profitability in the past has showed steady growth in return on invested capital but in 2008 the growth has flattened. But this is only a temporarily phenomena and the ROIC will again, in the near future increase to acceptable levels. At least that is what most financial analysts except will happen.

EducationsMSc in Finance and Accounting, (Graduate Programme) Final Thesis
Publication date2009
Number of pages106