dc.description.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. | en_US |