Strategisk regnskabsanalyse og værdiansættelse af BoConcept Holding A/S

Christian Schultz Larsen

Student thesis: Master thesis


The purpose of the thesis is a valuation of the Danish furniture company BoConcept Holding A/S listed on NASDAQ OMX Copenhagen. The thesis is divided into three parts. Part I will consist of a historic and strategic analysis of BoConcepts business model. The analysis describes that the movements in the company's stock price as well as its operating performance is strongly correlated with economic growth. Before the financial crisis put a damper on the expansion of brand stores, BoConcept had a huge growth potential due to economics of scale. Due to stagnant markets in Europe and the United States, BoConcept and almost all fellow furnishing companies in the industry are now struggling to make a profit. It is shown that the furnishing industry can be described as being highly fragmented, and even though a lot of smaller stores and chains have filed for bankruptcy during the last four years the level of competition will still make it hard to earn a profit that will satisfy the shareholders. Low-cost manufacturers have been able to capitalize on the situation and hereby increasing the competition within the industry and lowering the possibility of selling high margin products. In an attempt to boost profitability, BoConcept, as well as its competitors, is now seeking new opportunities in regions like Asia and South America, that at the moment are experiencing significant growth rates in their economy. Part II will consist of an analysis of BoConcepts financial statements, and it is shown what part of the operating performance that has had an influence on BoConcepts overall profitability. In the last three years BoConcept has not been able to generate any substantial growth in its revenue, but has instead had to rely on greater efficiency to keep its operating margin at level. The uncertainty whether BoConcept can keep its current level of revenue can have a critical impact on BoConcepts earning, due to its high operational leverage. A comparison between BoConcept and two fairly similar companies, shows a similar reliance on cost reductions, and a struggle to generate revenue, but also highlights a great deal of uncertainty regarding BoConcepts working capital. Part III lays the foundation for constructing the budget by gathering and analyzing the information obtained from part I and II. This is turned into a set of value drivers, that predicts the level of earnings BoConcepts business model might be able to generate. The EVA-model, which is used to estimate the market value of the firm's equity, shows that the stock is undervalued by 41 DKK, compared to the stock price of 94 DKK, on 26 of July 2013. It should however be mentioned that a sensitivity analysis of the different value drivers shows that the estimated price can fluctuate between 54 and 223 DKK, due to the uncertainties in the Asian, American and European economy. Whether BoConcept will be able to create growth in benefit of their shareholders, is highly dependent on its ability to expand the number of brand stores.

EducationsMSc in Auditing, (Graduate Programme) Final Thesis
Publication date2013
Number of pages135