FLSmidth: En makrofokuseret værdiansættelse

Søren Rørly Møller & Carsten Lindegaard Hansen

Student thesis: Master thesis


We started this thesis with the main question: How much is an FLS stock worth 23 February 2011? The question was motivated by a curiosity about how companies in very cyclical markets are valued − not to mention the large swings in commodities and business cycles recently. At the same time, it is important to consider the company’s strategic actions as it is in the interaction between the external factors and the internal decisions that value is created The central points in this thesis have been our focus on the two primary areas: the current strategic macroeconomic situation and our expectations of the aforementioned. The challenge in this thesis has been to link the external conditions with FLS’ current and future strategic decisions. To solve this challenge we chose to create our own forecasting models; an economic cycle model and two regression models. The models we have used are Porter’s Five Forces, PESTEL, Porter’s Value Chain, SWOT as well as the BCG-matrix. Our expectations were that FLS to a large extent was affected by the macro conditions and our expectations turned out to be proved by our regression models. The long term economical development in countries like China and India will in the future lead to favorable market conditions for cement due to large investments in infrastructure and housing and to a larger demand for consumer goods containing minerals. FLS has managed to exploit the focus in environmental issues and technological development and profit from them. We developed our own economic forecasting model based on Economic Cycle Research Institute’s leading indicator for the U.S. To forecast, we analyzed our model with the help of Joseph Schumpert’s four-phase model. Our forecast allowed us to come up with an educated guess on the the global economic development in the next five years. FLS’ strategy focusing on FLS Cement and in particular FLS Minerals has been a success and since the implementation, FLS’ revenue has more than doubled and the company’s earnings have grown 464 %. The central value drivers as a whole are their outsourcing, Customer Services, the change in GDP and Mine Capex and acquisitions of new companies, primarily in FLS Minerals. We used the DCF-model Enterprise Capital Value Model to find a fair value of DKK 689 compared to DKK 469 and to support our projection we used two trading multiples from the two different main peer groups (Minerals and Cement). To test the strength of our model, we did several sensitivity analyses, which confirmed our results, as did the trading mulitples. Therefore, we maintain our fair value of a FLS stock price of DKK 689 by 23. February 2011.

EducationsMSc in Finance and Accounting, (Graduate Programme) Final Thesis
Publication date2012
Number of pages188