What is the value of Kathmandu Holdings Ltd.?: An analysis based on DCF Model and Multiple Analysis
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Seminar paper from the year 2018 in the subject Business economics - Operations Research, grade: 2,0, University of Auckland (Graduate School of Management), course: BUSMGT 733: Analysing Financial Statements, language: English, abstract: Determining the value of a company is a complex procedure which cannot be automated by any algorithm. This report investigated the intrinsic value and the relative value of Kathmandu Holdings Ltd., a New Zealand based company operating in the retail speciality industry. The valuation was based on the discounted cash flow model (DCF model) and a market multiple analysis. In this light, this report used assumptions such as future growth rate, EBIT growth, working capital, PPE and intangible asset turnover, all of which were largely affected by micro- and macroeconomic factors. Based on our calculation of a value per share of $2.72 using the DCF model, Kathmandu has been slightly over-priced in 2018 (+13 per cent). This result was supported by the current share price of Kathmandu of $2.50 as of 1 March 2019. The selection of the company used for the market multiple analysis was based on the industry, comparable size, leverage, profitability and growth potential. Due to the size of the New Zealand economy and the nature of the Kathmandu business, the options to choose from were limited. We compared Kathmandu to The Super Retail Group, a retailer of automotive, outdoor equipment and clothing, operating in Australia, New Zealand and China. The NOA multiple of $2.74 suggested that Kathmandu was slightly over-priced, which was in line with our findings from the DCF model. Kathmandu Holdings Ltd. is a New Zealand based company operating in the retail specialty industry. It offers a range of apparel as well as travel and camping equipment and is a leading retailer in Australasia. As at 31 July 2018, Kathmandu operates 167 retail stores across New Zealand, Australia, and the UK. In addition, the premium outdoor brand is operating through o
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