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M2E - OUTLINE - Nguyen Ngoc Tu - VALUATION OF HABECO

This thesis outline examines the equity valuation of Hanoi Beer Alcohol and Beverage Joint Stock Corporation (HABECO). It will include a literature review on business valuation methods, an analysis of factors affecting valuation, and a methodology section describing the case study approach and data collection. The research findings will apply valuation models to determine the fair value of HABECO and assess whether the current share price is overvalued or undervalued. Recommendations will advise investors on the company's share worthiness.

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Phan Thanh Tùng
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100 views11 pages

M2E - OUTLINE - Nguyen Ngoc Tu - VALUATION OF HABECO

This thesis outline examines the equity valuation of Hanoi Beer Alcohol and Beverage Joint Stock Corporation (HABECO). It will include a literature review on business valuation methods, an analysis of factors affecting valuation, and a methodology section describing the case study approach and data collection. The research findings will apply valuation models to determine the fair value of HABECO and assess whether the current share price is overvalued or undervalued. Recommendations will advise investors on the company's share worthiness.

Uploaded by

Phan Thanh Tùng
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 11

Tu Nguyen Ngoc – 2018 – 2019

iaelyonSchool of Management, Jean Moulin Lyon


3 University

Master in Finance iaelyon / Université de


Thuongmai (UTM) Hanoï

ACADEMIC YEAR 2018 – 2019

Thesis Outline

Equity Valuation of Hanoi Beer Alcohol and


Beverage Joint Stock Corporation (HABECO)

By Nguyen Ngoc Tu
Tu Nguyen Ngoc – 2018 – 2019

TABLE OF CONTENT

CHAPTER 1 : INTRODUCTION

1.1. BACKGROUND OF THE STUDY


1.2. RESEARCH OBJECTIVES AND RESEARCH QUESTIONS
1.3.1. RESEARCH OBJECTIVES
1.3.1. RESEARCH QUESTIONS
1.3. METHODOLOGY
1.3.1. RESEARCH DESIGN
1.3.2. DATA COLLECTION
1.4. SCOPE OF THE STUDY
1.4.1. TIME PERIOD
1.4.2. LOCATION
1.5. STRUCTURE OF THE STUDY

CHAPTER 2 : LITERATURE REVIEW

2.1. OVERVIEW OF BUSINESS VALUATION


2.2. METHODS OF BUSINESS VALUATION
2.2.1. DISCOUNTED CASH FLOW (DCF)
2.2.2. PRICE/EARNINGS RATIO METHOD
2.3. FACTORS AFFECTING BUSINESS VALUATION
2.3.1. INFORMATION REQUIREMENTS FOR VALUATION
2.3.2. KEY FACTORS AFFECTING BUSINESS VALUATION
2.3.2.1. EXTERNAL FACTORS: INCLUDING ECONOMIC, POLITICAL, LEGAL, CULTURAL & SOCIAL,
ENVIRONMENTAL, TECHNOLOGICAL FACTORS
2.3.2.2. THE FIRM’S INTERNAL FACTORS

CHAPTER 3 : METHODOLOGY

3.1. RESEARCH DESIGN


3.2. DATA COLLECTION

CHAPTER 4 : RESEARCH FINDINGS

4.1. DATA ANALYSIS


4.2. RESEARCH FINDINGS

CHAPTER 5 : RECOMMENDATIONS
Tu Nguyen Ngoc – 2018 – 2019

Chapter 1 : INTRODUCTION

1.1. Background of the study

Hanoi Beer Alcohol and Beverage Joint Stock Corporation (HABECO) is


Vietnam’s third largest beverage company, headquartered in Hanoi,
Vietnam. The company offers its products under the Draft Beer Hanoi,
Hanoi Beer, Truc Bach Beer and Hanoi Beer Premium brands. Founded
as a 100% State-owned enterprise, it was transformed to joint stock
company in 2007. However, the Government (represented by Ministry of
Industry and Trade) still owns the most of the shares. The company was
listed on the stock exchange in October 2010.

By 31st December 2008, the Government holds 81.79%, the strategic


partner Carlsberg Breweries A/S 17.34%, Carlsberg Vietnam 0.16% and
other investors 0.7%. So, two largest shareholders keep 99.29% of the
shares. Under the strategic agreement between Habeco and Carlsberg
in 2008, when the Government divests from Habeco, Carlsberg has the
preferential right to be offered to buy first and it does not hide its intention
to become the controlling shareholder of Habeco.

According to the divestment plan of the Government, all its shares would
be sold out in 2016. However, there has not been much progress so far.
The main reason is that the Government want to maximize its benefit or
sell it at the best price.

By now, both big shareholders did not sell any shares, only a tiny amount
of shares has been traded and mostly in form of speculation. The study
is an effort to assess whether the company’s quoted market share price
is a fair reflection of value and give advice to investors if the company’s
share is worth buying or not.

1.2. Research objectives and Research questions

1.3.1.Research objectives

The objective of this research is to find out the fair value of Habeco.

1.3.1.Research questions
Tu Nguyen Ngoc – 2018 – 2019

 Question 1: What is the fair value of Habeco by 31 st December 2018?


 Question 2: What are the factors that affect the trading price of current
shares?
 Question 3: Are the shares overvalued or undervalued?

1.3. Methodology

1.3.1.Research design

This paper is a case study so it employs case study approach which is to


gain in-depth knowledge of Habeco, its area of business and future
prospects in order to answer the research questions in the best way
possible. This thesis applies descriptive design to study the fair value of
Habeco.

1.3.2.Data collection

Both primary data and secondary data on Habeco, its competitors and
the industry for 2013-2018 will be collected. However, this thesis is
mainly based on secondary data.

1.4. Scope of the study

1.4.1.Time period

My research is conducted within three years from 2016 to 2018.

1.4.2. Location

The study is conducted within Habeco.

1.5. Structure of the study

This thesis paper aims to find a fair value for Habeco by applying existing
models and approaches for analysis and valuation. It will be structured in
five chapters as follows:
Chapter 1: Introduction
Chapter 2: Literature review
Chapter 3: Methodology
Chapter 4: Research findings
Tu Nguyen Ngoc – 2018 – 2019

Chapter 5: Recommendations
Tu Nguyen Ngoc – 2018 – 2019

Chapter 2 : LITERATURE REVIEW

2.1. Overview of Business Valuation

Business valuation is required to generate an estimated “fair value” of a


business.

2.2. Methods of Business Valuation

2.2.1.Discounted Cash Flow (DCF)

The value of equity is obtained by discounting expected cashflows to


equity, i.e., the residual cashflows after meeting all expenses, tax
obligations and interest and principal payments, at the cost of equity, i.e.,
the rate of return required by equity investors in the firm.

The steps of this valuation are:

STEP 1: Assess the cash flows that will be obtained each year from the
business. The cash flows will be estimated for 3 years.

STEP 2: Discount these cash flows at an appropriate cost of capital. This


produce a value either for the equity shares or for the business as a
whole.

Where:
CF to equity t = Expected cash flow to equity in period t
Ke: cost of capital

2.2.2.Price/earnings Ratio Method

Market value per share = EPS x P/E ratio


Tu Nguyen Ngoc – 2018 – 2019

Market valuation (capitalization) =:

(for individual share): P/E ratio x earnings per share

(for all the company’s equity): P/E ratio x total earnings

The EPS could be a historical EPS or a prospective future EPS. For the
given EPS figure, a higher P/E ratio will result in a higher price.

2.3. Factors affecting Business Valuation

2.3.1.Information requirements for valuation

 Financial statements
 Summary of non-current assets and depreciation schedule
 Aged account-receivable summary
 Aged account-payable summary
 List of marketable securities
 Inventory summary
 Details of existing contracts
 List of shareholders with number of shares owned by each
 Budget forecast for 5 years
 Information about beer industry and economic environment
 List of major customers by sales
 Organisation chart and management roles and responsibility
 Profit forecast/budget

2.3.2.Key factors affecting Business Valuation

2.3.2.1. External factors: including economic, political, legal, cultural &


social, environmental, technological factors

2.3.2.2. The firm’s Internal factors

 Assets
 Business strategy
 Corporate governance
Tu Nguyen Ngoc – 2018 – 2019

 Finance: Historical financial performance, Future growth potential


 Product distribution network
 Customer relationship
 Human resources
 Dependence on top clients
 Dependence on owner
Tu Nguyen Ngoc – 2018 – 2019

Chapter 3 : METHODOLOGY

3.1. Research design

This paper is a case study so it employs case study approach which is to


gain in-depth knowledge of Habeco, its area of business and future
prospects in order to answer the research questions in the best way
possible. This thesis applies descriptive design to study the fair value of
Habeco.

3.2. Data collection

Both primary data and secondary data on Habeco, its competitors and
the industry for three years 2015-2018 will be collected. However, this
thesis is mainly based on secondary data.
Tu Nguyen Ngoc – 2018 – 2019

Chapter 4 : RESEARCH FINDINGS

4.1. Data analysis


 Excel: excel will be used for various calculations and preparing
spreadsheets
 Regression: Regression attempts to discern possible
relationships between two or more things (variables)
4.2. Research findings
From data analysis, key findings will be generated in response to
the research questions.
Tu Nguyen Ngoc – 2018 – 2019

Chapter 5 : RECOMMENDATIONS

 Conclusion on the relevancy of each valuation method

 Suggest the most appropriate/correct one for this company.

 Recommendations for the investors: the company’s share is worth


buying or not?

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