We are 31st December 2020. You are advising an investor, who is envisaging a potential investment in SUN company. You thus want to assess its value with the DCF valuation method (i.e. by discounting Free Cash Flows to Firms).
You have the following information (figures are in m)
Notes:
- please round up your figures at one decimal place for amounts in m
and at two decimal place for %
- please provide details on your main calculations
- please assume a tax rate of 30% in all your calculations
Here is the information that you have on hand regarding the group:
1) Calculate the free cash flows (Free Cash Flows to Firm) in m from 2021e to 2025e
Please use the table provided below (it is not compulsory to use all boxes provided)
1) What major challenges may you raise regarding the business forecasts assumptions provided by the group? Please refer to at least 2 challenges
1) Estimate SUNWeighted Average Cost of Capital (WACC)
1) Estimate the Terminal Value by taking a growth rate to infinite of 1%
1) Calculate SUN Enterprise Value (1 point)
2) On the basis of your results, calculate the Equity value of SUN?
3) What are the implicit 2020e Valuation Multiples (EV/Sales, EV/EBITDA, EV/EBIT and P/E) of the value you have calculated?
4) Your client wants to potentially buy 20% of the share capital of SUN. To what value does this potential investment correspond? Is it the price that you will advise him to pay (if you assume that the business plan assumptions are reasonable
SUN Balance Sheet SUN case study: DCF valuation(9.5 points) We are 31 December 2020. You are advising an investor, who is envisaging a potential investment in SUN company. You thus want to assess its value with the DCF valuation method (i.e. by discounting Free Cash Flows to Firms). 2020A 384,700 437,000 Em Goodwill Tangible fixed at Investment Inventaries Accounts receivable Cash at barn 110,000 124,000 156,150 You have the following information (figures are in Em) Notes: - please round up your figures atone decimal place for amounts in Em and at two decimal place for % - please provide details on your main calculations - please assume a tax rate of 30% in all your calculations Total Assets 1.211,850 Here is the information that you have on hand regarding the group: SUN P&L Deferred Taxes Suppliers Fiscal and social charges Provisions Short-term financial che Long term financial de Minority interest Shureholders' equity 28.000 53,000 67,000 54,000 75,000 359,000 69,000 506,850 FYE 31 Dec o 2020A 2021E 2022E 2023E 2024E 2025E Sales 96 Growth 684,321 828,956 721,621 55% 766,533 787,622 200 807,356 25% EBITDA As % of Sales 103,791 15 296 114,791 15 096 126,935 100% 130,428 100% 133,695 10.06 137,272 10.06 Total Equity & Llabilities & - 1.211.850 Depreciation As % al Sales (51,0) 75 (53,8) 7590 (571) 75 (58,7) 750 (60,2) 75 (61.8) 759 30 Year T-Band Risk premium Cost af det Unilevered bxeta Gearing (Net debit/equity) 2.55 5.00% 4.54% 1.25 30.00% EBIT As %of Sales 52.771 7.796 60,990 85% 69.786 0.1% 71.708 0190 73,503 019 75.489 9.19 Financial expenses (22,000) (22,660) (23,340) (24,040) 24,761) 47.888 48,741 (25,504) 49.965 Profit before tax 30,771 38,330 48,448 Taxes 30,0% (13,9) (92) soon (11.5) -300 (143) 3000 (146) 300 (15.0) -300 Minority interests (8,000) (8.240) (8,487) (8,742) (9,004) (9,274) Nest results 13.540 18,591 24.025 24,624 25,115 25,701 SUN Cash flow Items Capital expenditure As of Sales 57,000 6396 57,500 BO 58.000 70 58,000 7.496 59,000 7.396 59,000 7.196 115,000 Working Capital As % of Sales 117,000 17196 120,145 Tul 10.06 125,920 1649 128,110 10:39 ce 130,005 157 Activate v Go to Setting SUN Balance Sheet SUN case study: DCF valuation(9.5 points) We are 31 December 2020. You are advising an investor, who is envisaging a potential investment in SUN company. You thus want to assess its value with the DCF valuation method (i.e. by discounting Free Cash Flows to Firms). 2020A 384,700 437,000 Em Goodwill Tangible fixed at Investment Inventaries Accounts receivable Cash at barn 110,000 124,000 156,150 You have the following information (figures are in Em) Notes: - please round up your figures atone decimal place for amounts in Em and at two decimal place for % - please provide details on your main calculations - please assume a tax rate of 30% in all your calculations Total Assets 1.211,850 Here is the information that you have on hand regarding the group: SUN P&L Deferred Taxes Suppliers Fiscal and social charges Provisions Short-term financial che Long term financial de Minority interest Shureholders' equity 28.000 53,000 67,000 54,000 75,000 359,000 69,000 506,850 FYE 31 Dec o 2020A 2021E 2022E 2023E 2024E 2025E Sales 96 Growth 684,321 828,956 721,621 55% 766,533 787,622 200 807,356 25% EBITDA As % of Sales 103,791 15 296 114,791 15 096 126,935 100% 130,428 100% 133,695 10.06 137,272 10.06 Total Equity & Llabilities & - 1.211.850 Depreciation As % al Sales (51,0) 75 (53,8) 7590 (571) 75 (58,7) 750 (60,2) 75 (61.8) 759 30 Year T-Band Risk premium Cost af det Unilevered bxeta Gearing (Net debit/equity) 2.55 5.00% 4.54% 1.25 30.00% EBIT As %of Sales 52.771 7.796 60,990 85% 69.786 0.1% 71.708 0190 73,503 019 75.489 9.19 Financial expenses (22,000) (22,660) (23,340) (24,040) 24,761) 47.888 48,741 (25,504) 49.965 Profit before tax 30,771 38,330 48,448 Taxes 30,0% (13,9) (92) soon (11.5) -300 (143) 3000 (146) 300 (15.0) -300 Minority interests (8,000) (8.240) (8,487) (8,742) (9,004) (9,274) Nest results 13.540 18,591 24.025 24,624 25,115 25,701 SUN Cash flow Items Capital expenditure As of Sales 57,000 6396 57,500 BO 58.000 70 58,000 7.496 59,000 7.396 59,000 7.196 115,000 Working Capital As % of Sales 117,000 17196 120,145 Tul 10.06 125,920 1649 128,110 10:39 ce 130,005 157 Activate v Go to Setting
