Værdiansættelse af Bang & Olufsen A/S

Bárður við Skipá & Rasmus Schjødt

Student thesis: Master thesis


The main objective of this Master’s thesis is to estimate the market value of Bang & Olufsen A/S (B&O) based on a DCF valuation and to determine whether the share is attractive for current and potential investors. The DCF valuation is based on budget assumptions deriving from strategic and financial analysis. This method is supported by a relative valuation based on market multiples of comparable companies. The strategic analysis leads to the conclusions that B&O is facing crucial challenges regarding their product line within the AV business area. B&O’s role as a technological follower in the industry and the rapid development in the video segment leads to the importance of a shortened time-to-market if the AV revenue is to be restored. To strengthen the company’s position in the market, a key element in the new strategy is to shift the R&D-focus towards sound, acoustics, and manufacturing of materials. Furthermore, an expansion towards the BRIC-countries and a downgrade in the European market is seen as an important goal to achieve higher sales and margins. B&O Play and Automotive are, on the other hand, growing business areas. The strategic partnerships with distributors of luxury goods and car manufacturers, respectively, are a foundation for a continued increase in revenue in the long run. The forecast assumptions rely on the success of these business areas. The forecast estimates a short-term decrease in the EBITDA margin, while the revenue is expected to increase each year due to large growth in B&O Play and Automotive. It is estimated that the revenue will reach close to DKK 5 billion in 2016/17 – compared to the management’s expectations of DKK 8-10 billion. This questions the reliability of the proposed strategy. The valuation based on the DCF model and the scenario analysis estimates the weighted market value of equity to DKK 2,622.2 million per 31 January 2013 – corresponding to DKK 66.8 per share. This implies that the estimated stock price is 3.6 percent above the listed price. The sensitivity analysis illustrates that the DCF model is highly dependent of the underlying inputs, especially regarding the terminal value. Thus, a price interval is estimated from plausible input values to a share value ranging from DKK 55.0 to DKK 83.0.

EducationsMSc in Finance and Accounting, (Graduate Programme) Final Thesis
Publication date2013
Number of pages145