VALEO SA Valuation

Global Capital Markets Assignment

Discounted Cash Flow Analysis

Sadeddine YAHIA
Guilhem DACH
Cyril KOTAS
Minh-Quang PHAM
Hubert CHRISTOPHE

on

Valeo SA Valuation
Key figures
Beta
WACC
Price per share based on DCF

1.55
8.8%
55.40

Real Value
ASSET
Net assets
Goodwill
Tangible asssets
Intangible asset
Prepaid pension cost

Net fixed assets

Working capital
Cash
Asset hold for sale
ASSET
Capital Employed

LIABILITIES
Share Capital

Additional paid-in capital

Retained earnings
Translation reserve
Minority interests

Total common stockholders investment

Total common stockholders investment
Total other long-term liabilities
LONG-TERM DEBT, LESS CURRENT PORTION
Total Debt
Gearing
Current portion of long term debt

Real Value
12/31/2009

12/31/2010

1154
1,665.00
527.00
-

1154
1,655.00
600.00
-

3,346
6%
449
860.00
5.00
4,660
3,795

3,409
4%
422
1,316.00
5.00
5,152
3,831

12/31/2009
235.00

12/31/2010
235.00

1,402.00
511.00 -
51.00

1,402.00
399.00
-
51.00

$5,900,000,000
1,177.00
799.00
1,447.00
1,447
123%
192.00
16%
0

$6,545,000,000
1,289.00
-
1,502.00
1,502
117%
192.00
15%
0

Debt and Other Borrowing

1,639

1,694

OTHER LIABILITIES
DEFERRED INCOME TAXES

1097
16

1089
16

Non operating Debt

1,113
24%

1,105
21%

TOTAL DEBT

2,752

2,799

TOTAL LIABILITIES

3,929

4,088

Short term Debt

Estimation
12/31/2011
1154
1,655.00
820.00
-

3,629
7%
574
1,089.00
5.00
5,297
4,203

12/31/2011
235.00

1,402.00
121.00
-
51.00

$7,288,000,000
1,567.00
-
1,299.00
1,299
83%
192.00
12%
0
0%
1,491
1208
16
1,224
23%
2,715
4,282

VALEO SA
Income statement
( in milions)

Detailed forecast
Real Value
2009

Real Value
2010

Sales

7499

Growth rate
Operating Expenses
EBITDA
EBITDA margin
Depreciation and Amortizatopm
% Fixed Assets

6,361
133
1.8%
49
1.46%

EBIT
Operating margin
Interest Income
Growth rate

9632
28.44%
7,897
1,325
13.8%
735
21.56%

Fading period

Estimation
2012

8636
-10.34%
7,544
1,092
12.6%
553

Estimation
2013
9205
6.59%
7,917
1,288
14.0%
561

15.24%

14.90%

Estimation
2014
9748
5.90%
8,603
1,146
11.8%
512

13.0%

Normative year
Estimation
2015

10255
5.20%
9,099
1,156
11.3%
541
13.0%

Estimation
2016
10727
4.60%
9,509
1,218
11.4%
574

13.0%

Normative year
11156
4.00%
9,874
1,282
11.5%
612

590
6.1%
7
-114%

539
6.2%
27
286%

727
7.9%
43
59%

634
6.5%
46
6%

615
6.0%
48
5%

644
6.0%
50
5%

669
6.0%
52
4%

-107

-126
18%

-107
-15%

-88
-18%

-82
-6%

-77
-6%

-72
-6%

-68
-6%

471
104
367
3.8%

459
158
301
3.5%

682
235
447
4.9%

597
180
417
4.3%

693
209
483
4.7%

716
216
500
4.7%

737
223
515
4.6%

-74
79
-153
-2.0%

11546
3.50%

634
13.05%

13.0%

84
1.1%
-51

Interest Expenses
Growth rate

INCOME BEFORE TAXES

PROVISION FOR INCOME TAXES
NET INCOME
Net margin

Estimation
2011

693
6.0%
-197.76%

-6.31%

755
228
527
4.6%

VALEO SA
DCF Model
( in milions)

Detailed forecast
Real Value

Real Value

Estimation

Fading period

Estimation

Estimation

Estimation

Normative year
Estimation

Estimation

2009

2010

2011

2012

2013

2014

2015

2016

NOPAT
+ Depreciation and Amortization
-capex
-working cap variation

5
49
-430
109

486
735
-725
27

381
553
-553
-152

492
561
-561
-11

453
512
-514
-11

406
541
-539
-36

427
574
-574
-39

447
612
-612
-41

465
634
-803
-42

FCF
Discount coefficient
DCF

0.09

229
0.92
210

481
0.84
406

440
0.78
342

372
0.71
265

389
0.66
255

406
0.60
245

253
0.60
2878

3,629
574
6.6%
4,203
9.9%

3,764
585
6.4%
4,349
11.7%

3,924
596
6.1%
4,520
10.4%

4,145
632
6.2%
4,778
9.0%

4,401
671
6.3%
5,071
8.9%

4,692
712
6.4%
5,404
8.8%

4857
697
6.0%
5,554
8.6%

Fixed assets
Working capital
WC/Turnover
Capital Employed
RCE
Company value
Net debt
Equity value
Number of share outstanding 2010

Value per share

3,346
449
6.0%
3,795

4,601.98
440.00
4,161.98
75,124,014.00

55.40

3,409
422
4.4%
3,831
12.8%

Normative year

VALEO SA
Income statement
( in milions)
Risk-free rate
Average debts interest rates (before taxes)
Taxe rate
country risk premium
Adjusted Beta
Beta

3.33%
6.35%
10.3%
6.0%
1.55
1.82

Cost of Equity
Weight of FP dans le passif
Part of the WACC coming from Equity

12.63%
44.71%
5.65%

Average cost of debts before taxes

Average cost of debts after taxes
weight of debts in the passif
Part of the WACC coming from Debts

6.35%
5.69%
55.29%
3.15%

WACC

Equity
Financial debts
Ratio Debt/Equity
Number of share outstanding in 2010
Price per share
Capitalisation FP

8.80%

1,688
1,447
0.86
75.214
15.56
1,170

Date
FedEx
S&P 500
1-Jul-06
28.61
5009.42
1-Aug-06
28.56
5156.04
1-Sep-06
28.13
5250.01
1-Oct-06
29.49
5248.73
1-Nov-06
30.16
5327.64
1-Dec-06
31.53
5541.76
1-Jan-07
35.01
5608.31
1-Feb-07
37.21
5516.32
1-Mar-07
43.91
5634.16
1-Apr-07
42.33
5960.04
1-May-07
42.33
6104
1-Jun-07
39.81
6054.93
1-Jul-07
37.98
5751.08
1-Aug-07
35.57
5662.7
1-Sep-07
39.02
5715.69
1-Oct-07
37.81
5847.95
1-Nov-07
34.5
5670.57
1-Dec-07
28.2
5614.08
1-Jan-08
24.61
4869.79
1-Feb-08
25.13
4790.66
1-Mar-08
25.12
4707.07
1-Apr-08
26.03
4996.54
1-May-08
25.63
5014.28
1-Jun-08
20.4
4434.85
1-Jul-08
20.85
4392.36
1-Aug-08
24.4
4482
1-Sep-08
21.25
4032.1
1-Oct-08
13.59
3487.07
1-Nov-08
9.85
3262.68
1-Dec-08
10.615
3217.97
1-Jan-09
8.74
2973.92
1-Feb-09
9.9
2702.48
1-Mar-09
11.005
2807.34
1-Apr-09
15.715
3159.85
1-May-09
13.98
3277.65
1-Jun-09
13.11
3140.44
1-Jul-09
18.6
3426.27
1-Aug-09
17.76
3653.54
1-Sep-09
17.985
3795.41
1-Oct-09
18.53
3607.69
1-Nov-09
19.055
3680.15
1-Dec-09
24.53
3936.33
1-Jan-10
23.885
3739.46
1-Feb-10
22.415
3708.8
1-Mar-10
26.425
3974.01
1-Apr-10
25.405
3816.99
1-May-10
22.61
3507.56
1-Jun-10
22.505
3442.89
1-Jul-10
27.415
3641.14
1-Aug-10
27.54
3490.79
1-Sep-10
33.985
3715.18

Rent. FedEx
0.18%
1.53%
-4.61%
-2.22%
-4.35%
-9.94%
-5.91%
-15.26%
3.73%
0.00%
6.33%
4.82%
6.78%
-8.84%
3.20%
9.59%
22.34%
14.59%
-2.07%
0.04%
-3.50%
1.56%
25.64%
-2.16%
-14.55%
14.82%
56.36%
37.97%
-7.21%
21.45%
-11.72%
-10.04%
-29.97%
12.41%
6.64%
-29.52%
4.73%
-1.25%
-2.94%
-2.76%
-22.32%
2.70%
6.56%
-15.18%
4.01%
12.36%
0.47%
-17.91%
-0.45%
-18.96%
-12.00%

Rent. S&P500 XY
-

0.03
0.02
0.00
0.01
0.04
0.01
0.02
0.02
0.05
0.02
0.01
0.05
0.02
0.01
0.02
0.03
0.01
0.15
0.02
0.02
0.06
0.00
0.13
0.01
0.02
0.11
0.16
0.07
0.01
0.08
0.10
0.04
0.11
0.04
0.04
0.08
0.06
0.04
0.05
0.02
0.07
0.05
0.01
0.07
0.04
0.09
0.02
0.05
0.04
0.06
0.03

- 0.0000
- 0.0003
- 0.0000
0.0003
0.0017
0.0012
- 0.0010
0.0032
- 0.0020
0.0005
0.0025
0.0011
0.0008
- 0.0007
0.0030
0.0022
0.0223
- 0.0003
0.0000
0.0020
- 0.0001
0.0335
- 0.0002
0.0029
0.0165
0.0881
0.0261
- 0.0010
0.0176
- 0.0118
0.0038
0.0334
- 0.0045
0.0029
0.0246
- 0.0029
0.0005
- 0.0015
0.0005
0.0145
0.0014
0.0005
0.0101
0.0017
0.0109
0.0001
0.0098
- 0.0002
0.0115
0.0037

X^2
0.0008
0.0003
0.0000
0.0002
0.0015
0.0001
0.0003
0.0004
0.0030
0.0006
0.0001
0.0028
0.0002
0.0001
0.0005
0.0010
0.0001
0.0234
0.0003
0.0003
0.0034
0.0000
0.0171
0.0001
0.0004
0.0125
0.0244
0.0047
0.0002
0.0067
0.0101
0.0014
0.0124
0.0013
0.0019
0.0070
0.0039
0.0014
0.0027
0.0004
0.0042
0.0028
0.0001
0.0045
0.0017
0.0078
0.0004
0.0030
0.0019
0.0036
0.0010

1-Oct-10
1-Nov-10
1-Dec-10
1-Jan-11
1-Feb-11
1-Mar-11
1-Apr-11
1-May-11

38.62
38.605
42.465
42.75
45.1
41.155
42.995
44.02

3833.5
3610.44
3804.78
4005.5
4110.35
3989.18
4106.92
4006.94

0.04%
-9.09%
-0.67%
-5.21%
9.59%
-4.28%
-2.33%

1366.42
1394.46

0.17%

0.06
0.05
0.05
0.03
0.03
0.03
0.02

0.42%

0.0000
0.0046
0.0003
0.0013
0.0029
0.0012
- 0.0006

0.0038
0.0026
0.0025
0.0007
0.0009
0.0008
0.0006

0.002508

Variance 0.00325697
Covariance 0.00593166
Raw Bta 1.82122046

0.20
0.15
0.10
0.05
-40.00%

-20.00%

0.00%
-0.05
-0.10
-0.15

20.00%

40.00%

60.00%

80.00%

80.00%