Strategisk analyse og værdiansættelse af Bang & Olufsen A/S

Studenteropgave: Speciale (inkl. HD afgangsprojekt)

  • Kasper Oue Laursen
  • Dan Visti Bøgh Jensen
  • Karina Abildgaard Sørensen
4. semester, HD 2. del (Regnskab og Økonomistyring) (Diplomuddannelse)
The purpose of this project was to assess a computed market value of B&O which must be seen in the light of the financial crisis which has entailed a lot of adversity for the price of shares at the stock exchange. The assessment is computed based on a strategic analysis as well as a financial analysis which are to form the basis for our budgeting which will later on result in the assessment of the price of shares.
Collection of data in relation to articles, press releases as well as the price was fixed at 31 March 2013 at which point the price was DKK 52 per share.
Strategic analysis
The strategic analysis contains several relevant models of which the intention is to illustrate both external as well as internal conditions to B&O which may influence the assessment of the share.
In the analysis several measurements were illustrated as well as several possibilities and threats were emphasized to B&O and their future. The main items of the analysis in particular focus on the AV segment, B&O PLAY, Master Dealers, the closure of B1 stores as well as the growth in China.
There was a large decline in the AV segment in recent years which in particular is due to the financial crisis which has resulted in reservation as regards the consumers’ demand. This decline has had great importance to B&O which is also expressed in the analysed key figures.
B&O PLAY is a segment in progress. Turnover for this product group increased with more than 100% from 2010/11 to 2011/12. This is also one of B&O’s large ventures which are to contribute to meeting their goal regarding growth in the next years.
In continuation of both the AV segment and B&O PLAY, B&O has focused on entering agreements with several Master Dealers. The idea with these Master Dealers is that these will handle the distribution and sale of B&O’s products in the land in question. In recent years agreements with Master Dealers were entered in India and China, respectively, as a part of the BRIC countries.
B&O particularly focuses on the BRIC countries where China especially is an interesting market as China is developing into a new super power instead of USA. The Chinese economy is rising which B&O must be able to make the most of in future. B&O for instance attempts to do this through cooperation regarding marketing, sales and lay-out of the stores in China.
On the contrary, in particular the European market is experiencing a crisis situation and therefore the consumers have altered their consumer habits which primarily are a result of the financial crisis. This means that B&O has experienced a decline on this market and therefore B&O has taken the consequence of this decline and is closing 125 B1 stores on the European market. These closures are also a part of B&O’s new strategy “Leaner, Faster, Stronger” which is the basis for the next 5 years of B&O’s road towards better times.
Together these contributed to both increase and decline in growth which affects the computation of the price.
Financial analysis
We analysed the historical financial information from B&O based on a prepared re-formulated income statement as well as balance sheet for the past 5 financial years. This analysis clearly shows that the financial crisis has had a large influence on B&O as the key figures, operating margin, asset turnover ratio, ROIC and ROE all declined significantly in the financial year 2008/09. In the subsequent financial years, B&O was able to turn the negative development around where several of the before-mentioned key figures experienced progress.
Moreover, the analysis showed that B&O has a low financial gearing as the company has low foreign financing and high own financing in the form of equity.

Based on the above strategic analysis as well as the financial analysis, we created a basis for preparing the budget which forms the final basis for the assessment itself. This is prepared by using the Discounted Cash Flow model.
Two budgets were prepared where the first is based on the above analysis which is called our base case scenario. The second budget is prepared based on a more pessimistic approach to B&O’s future which is called our worst case scenario.
Before the assessment itself we also computed the average capital expenses, called WACC. Our computations show a WACC of 7.82% which expresses the minimum yield which B&O is to give in order to be attractive to the investors.
Regarding the base case scenario the price was computed at DKK 47.85 per share, equivalent to 8% less value compared to our fixed price of DKK 52 per share. On the contrary, regarding the worst case scenario a price of DKK 33.52 was computed, equivalent to 36% less than our base case scenario.
Thereby the result of this report is that the market value at the stock market is over estimated in relation to our computed market value which may be due to several factors. The most obvious reason for this is that the investors had a larger confidence in B&O’s future than our budget shows. Moreover, it is probable that the investors have great knowledge regarding B&O, their future strategy as well as the market possibilities.
Subsequent to the assessment a sensitivity analysis was performed in which focus is placed on sensitivity towards the different factors included in the computation of WACC as well as sensitivity towards changes in turnover. Upon a change in our WACC of +1% it results in a market price of DKK 40.12 and on the contrary, upon a decline in our WACC of -1% it results in a market value of DKK 59.26.
Udgivelsesdato6 maj 2013
Antal sider154
ID: 76170014