En værdiansættelse af ”LEGO Group”

Abstract

The purpose of this graduation project has been to estimate the fundamental value of LEGO Group as of 31.12.2021 with the perspective of an investor or a potential buyer. The valuation of LEGO Group is based upon the strategic and financial analysis, which has built the basics for the forecasting of future value drivers.
The strategic analysis is conducted with an external analysis, which holds the PESTEL-model and a Porter’s Five Forces, and an internal analysis, which holds the Ansoff’s Growth Matrix. A SWOTanalysis is also created, which sums up the company’s strength, weakness, opportunities, and threats.
The strategic analysis stated that LEGO’s largest markets, Europe, and America, has been stagnated and hasn’t seen any significant growth in the last years. Asia on the other hand, and in particularly China, has seen double digit growth and has evolve into a priority marked for Lego. Lego has invested in production facilities and 40% of all Lego branded stores a placed in China. In general, the strategic analysis showed a future for Lego, where they have a lot of opportunities as they are one of the market leaders with a strong growth rate.
The financial analysis stated that LEGO has been in a strong period of sales growth, where the COVID19 pandemic further increased the trend. LEGO’s ROE has been in a downtrend since 2012 because of large investments and revenue that hasn’t really followed in the same speed. In 2021 the ROE is back at historical levels at 46,18%. All in all, the financial performance of LEGO has been very good, as they still are able to maintain a high level of ROE as they are investing heavily in strategic decisions.
The strategic and financial analysis were used as the base for the forecast of value drivers and future performance of LEGO. The forecast showed a continuous sales growth and increase in operating costs as well. The increase in operating costs is mostly driven by production and sales costs as new investments are made in Asia.
For the valuation the DCF and RIDO models were applied for estimating the fundamental value of LEGO Group. Both models were used as a control point for not making any calculative errors. The estimated value of LEGO Group as of 31.12.2021 was 501.237 million DKK.
A sensitivity analysis was then conducted to explore the uncertainty of the models. The valuation models seemed to be very sensitive to changes in WACC, as 40 basis points were able to retract 50.000 million DKK from estimate value. Two different valuation scenarios were also conducted.