Valuation of Lis Companies
Autor: Patummas • March 10, 2016 • Case Study • 416 Words (2 Pages) • 805 Views
Valuation of LIS companies
- Comment the 4 underlined figure (did with teacher in class)
- Regulated provision = 1200, because it has a hidden tax for new owner to pay therefore, we need to subtract corp. tax(37%) when restated
- Exceptional income = 675, it comes from selling of LISA ((4100*75%)-2400)
- Sale of asset = 3075, comes from sale price of LISA (4100*75%), cash inflow
- Intangible asset = 550, includes goodwill (250) and amortization of organization cost (at beg N-1; org cost = 900 and at end N-1 left 600; therefore, amortization cost = 300)
- Valuate LIS with Restated net asset with goodwill
- RS: building net gain = 15000-8000 = 7,000, after corp tax reduction = 4410 inc. in RNA
- RS: Intangible asset = gw + org cost = (250 + 300*63%) = 439
- RS: Financial liability, a debt of 5000 has no interest charged; so, we have to add back the interest that we have deduct in year N+3
- RS: regulation provision, 37% of provision is hidden tax that would be pay by the future new owner, so we need to deduct the cost that we need to pay.
- Therefore, the net restatement is +4605.7
- RNA = 132,059 + 4,105.7 = 136,164.7
RNA with goodwill | tax reduction | ||
RS: building | 7000 | 4410 | value inc. |
RS: Amortization of Org cost | 300 | 189 | subtract |
goodwill | 250 | ||
RS: Financial Liabilities | 918.5 | 578.7 | add back |
(no interest charge) |
| ||
RS: Regulated Provision | 1200 | 444 | subtract |
Net Restatement |
| 4105.7 |
goodwill | |||||||
discount rate | 12% | =6%+100%*6% | |||||
Risk free revenue | 8169.9 | ||||||
Year | N+1 | N+2 | N+3 | N+4 | N+5 | ||
Restated net income | 11764 | 13537 | 14236 | 15109 | 16721 | no change in this part | |
Risk free revenue | 8169.9 | 8169.9 | 8169.9 | 8169.9 | 8169.9 | ||
superprofit | 3594.1 | 5367.1 | 6066.1 | 6939.1 | 8551.1 | ||
NPV of superprofit | 3209.0 | 4278.6 | 4317.7 | 4409.9 | 4852.1 | ||
GW | 21067.4 |
Therefore, the RNA with goodwill is 136,165 +21,067 = 157,232
- Valuate LIS with PE ratio in N+1
PE ratio | |||
Year/company | N | N+1 | |
A | 13.93 | 11.56 | |
B | 14.47 | 12.34 | |
C | 13.98 | 11.69 | |
D | 18.08 | 13.82 | |
D translated in French PER | 15.37 | 11.75 | |
E | 22.07 | 13.86 | |
E translated in French PER | 18.76 | 11.78 | |
Average of benchmark | 11.82 | ||
we choose year N+1 as benchmark because there is similarity | |||
Value of the Target TC | 139,086.3 |
- Valuate LIS with Fisher value with
- residual or resale value based on RNA without GW at the end of N+5
- residual or resale value based on PE ratio of 10 at the end of N+5
- DCF with Gordon Shapiro resale value
Fisher Valuation | |||||
fisher rate | 11% | ||||
year | N+1 | N+2 | N+3 | N+4 | N+5 |
Dividend | 5882 | 6768 | 7118 | 7554 | 8361 |
NPV of dividend | 4773.877 | 6097.24237 | 5204.4796 | 4975.874 | 4961.623 |
sum of NPV | 26013.1 | ||||
end value with RNA without GW | |||||
RNA of yearN+5 | 171849 | ||||
=136165+(71367-35683) | |||||
NOTED | sum of RNI | 71367 | |||
sum of div | 35683 | ||||
total value | 197862.1 | (26013.1+197862.1) | |||
end value with P/E ratio | |||||
RNA of YearN+5 | 167210 | ||||
=16721*10 | |||||
exit value | 99226.53 | ||||
total value | 125239.6 | (26013.1+99226.53) |
- Valuate LIS with DCF with Gordon Shapiro resale value
DCF | |||||
Net liability | -22670 | net liabilities<0 | |||
we use fisher rate | 11% | ||||
Year | N+1 | N+2 | N+3 | N+4 | N+5 |
restated operating income | 18645 | 21444 | 22547 | 23911 | 26440 |
economic corp tax | 6898.7 | 7934.3 | 8342.4 | 8847.1 | 9782.8 |
depreciation | 6000 | 5000 | 5800 | 6400 | 6000 |
change in WCR | 3972 | 4170 | 4380 | 4598 | 4828 |
net capex | 3000 | 8000 | 9000 | 4000 | 4000 |
FCF | 10774.4 | 6339.7 | 6624.6 | 12865.9 | 13829.2 |
NPV of FCF | 9706.534 | 5145.36626 | 4843.7268 | 8474.881 | 8206.587 |
DCF | 36377.1 | ||||
end value with gordon shapiro | |||||
end value | 125708.6 | growth rate =0 | |||
exit value | 74598.56 | ||||
total value | 133645.7 | =36377.1+45101.56-(-22670) |
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