Værdiansættelse af Vestas Wind Systems A/S

Mark Francis Johannesson

Student thesis: Diploma thesis


This thesis is a valuation of Vestas Wind Systems A/S (Vestas), which manufactures, sells, and services windmills across the globe. The valuation is broadly based on a strategic analysis, financial statement analysis and forecasting. The strategic analysis is conducted using a PESTLE analysis, Porter’s Five Forces, Ansoff’s Growth Matrix, Value Chain analysis and lastly, a SWOT analysis, which sums up the section. The models clarify the macroeconomic environment, the competitive landscape, and the growth strategies as well as categorizes the internal competencies of the company as either primary or support activities. Finally, the Discounted Cash Flow and RIDO models are used to calculate the present value of the company’s equity. The political agenda of wind power seems unlikely to lose momentum in the future as several analyses point to the contrary. In the USA congress has approved that buyers of windmill projects will be subsidized in 2013 and Germany has made the drastic decision to shut down its 17 nuclear power plants by 2022. Based on market analyses Europe stands to lose its leading position and will only account for 27 percent of all wind energy in the world by 2016. The USA and Canada will continue to grow until 2016 and Brazil will become the country in Latin America with the greatest demand for wind power. South and East Asia, including China, will become the region with largest demand for wind energy by 2016 and will at that time consume 44.3 percent of the world’s wind energy. Although Vestas has sizable market shares on the European and American markets, they have a very small presence on the Chinese market where they only held a 3 percent market share in 2011. The financial statement analysis is based on a 7 year period from 2006 to 2012. The best year was 2008, which saw Vestas achieve a ROIC of 33.96 percent and a ROE of 32.94 percent. The worst year was 2012 with a ROIC of -33.00 percent and ROE of -53.84. During this period Vestas has changed its capital structure significantly. Whereas Vestas had negative net financial obligations from 2006 to 2009, they drastically increased their gearing from 2010 and in 2012 they had a FGEAR of 59.94 percent. The valuation is performed based on three possible scenarios. The first scenario is a “stand alone” valuation, the second is one in which Vestas is assumed to be acquired by an industry competitor and the third is a liquidation of Vestas where only the service department of the company is valued. The WACC that is used to discount the future cash flows is estimated to 9.02321 percent. The value of Vestas’ shares based on the “stand alone” scenario is calculated to be 7.28 EUR per share as of the 1st of May 2013. It is noteworthy that this value is higher, than the current market value of 6.6740 EUR per share.

EducationsGraduate Diploma in Finance, (Diploma Programme) Final Thesis
Publication date2013
Number of pages108