Verdsettelse av Lerøy Seafood Group

Abstract

This bachelor thesis aims to correctly valuate Lerøy Seafood Group ASA (LSG) based on the free cash flow to the firm. Valuation is done by forecasting and discounting a future cash flow. The discount rate stated in the latest LSG’s annual reports was selected and adjusted to ensure a conservative valuation. The forecast is derived from empirical analysis of internal factors such as financial key figures or resources and external factors like trade situation or political developments. The empirical analysis contains presentation of both quantitative and qualitative factors to determine LSGs future. LSG has changed their accounting from IAS 17 to IFRS 16. This change reduces the transparency of the annual reports but is common in the industry now. One point of concern is a 50% increase in paid salary in the last annual report since there are no major changes in staff or any comments justifying that. The financial key figures are in general stable and major deviations are easy understandable. The VRIO framework is used for internal analysis without identifying any point of reasonable concern. PEST framework and porters five forces are used for external analyses. There is a sign that LSG may be at a point of having reached a stall point in their growth. However, the forecast is created to reflect all the findings in the empirical analysis and shows a future growth for the company. The valuation is therafter conducted providing a value of LSGs stock. Lastly before concluding I have ran a Monte Carlo simulation to analyze the sensitivity of the results and mitigating some uncertainty regarding the forecasting. The conclusion of the thesis is that the market value of LSG’s stock should be at NOK 77,74. It is not a viable investing opportunity due to the minor difference compared to the current stock price of NOK 76,02. The Monte Carlo simulation has yielded that the probability for a positive return is only slightly higher than a negative, showing that there is a possibility of experiencing losses of investment.