Assignment This assignment replaces the final exam originally scheduled for April 1st 2020. You must hand in your written report by April 1st 2020, 12.00 p.m. CET the latest to receive a grade....

Assignment

This assignment replaces the final exam originally scheduled for April 1st 2020. You must hand in your written report by April 1st 2020, 12.00 p.m. CET the latest to receive a grade. Reports must be sent to [email protected]. Each student is expected to hand in a written report, this is no group work.

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  Choose a company from the German Stock Index DAX-30 which represents the 30 largest publicly listed German companies except Daimler AG. This leaves you with 29 companies.

  
  


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  Write a short introduction (1-2 pages) with basic facts on the company. This should describe for example the line of business, the size, key share holders etc. You can use the factsheet from Reuters given to you as a guideline.

  
  




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  Use publicly available sources like company websites, annual statements etc. to collect data to run a valuation of the company. Cite your sources in the report.

  
  

Valuation Part 1

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  Conduct a valuation of the company by using the Multiples approach. Set up a peer group of comparable companies (this should be something between 3 and 5 comparable companies) and choose a multiple.

  
  


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  Give a short (~ 2 pages) report on your results, the peer group you used and eventual pitfalls you may expect regarding the results of your valuation.

  
  

Valuation Part 2

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  Conduct a Discounted Cash Flow valuation of the company.

  
  


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  Set up a cash flow forecast with a detailed planning period and a terminal value period and comment on the growth pattern and your assumptions for the terminal value.

  
  


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  Calculate the cost of capital needed to discount the cash flows. Describe the input parameters like risk free rate of return, market risk premium etc. and make sure that the cash flows and the cost of capital you use match, for example cash flow to the firm with WACC or cash flow to equity with cost of equity.

  
  


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  Write down the basic assumptions used to create the cash flow table, for example whether there were certain company specific one-time items etc. and the cost of capital.

  
  


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  Report the results of your valuation and compare them to the Valuation part 1 (~3 pages for this and the assumptions). Add your cash flow table as an appendix or in a separate Excel file. Conclude by recommending either to buy, hold or sell the shares of the company you valued.

  
  

Please hand in your written report either as .doc or .pdf, your calculations and cash flow tables can either be an appendix in the report file or come as a separate Excel file.

If there are any questions, feel free to contact me via email. I will answer questions up to March 29th 2020. Depending on the amount of questions, I may decide to offer a short online session which will be announced by mail in advance.

Given the very challenging situation that we all face due to the spread to the Corona crisis, I hope this is a suitable solution that allows you to finish this course successfully.

Best regards