| dc.description.abstract | This thesis examines the value of Marine Harvest ASA per December 17,
2015. The analysis was performed by using fundamental and relative
valuation approaches and the assumptions made in the analysis was made
on the basis on throughout analyses of the macro, industry and firm-specific
drivers of value in the salmon farming industry. The share price was derived
exploring six key factors affecting the cash flows, risk and financial structure
of MHG. First, the strategic analysis finds that economic conditions are
favorable for the export of Norwegian salmon, but that opportunities for
organic growth are limited because of health- and environmental issues and
the strictly regulated access to licenses. The industry has consolidated
largely and this is likely to be the main driver of growth for MHG. Second, I
find that operational margins have been persistently stable, and hence I
conclude that historical margins will also be applicable for the forecast
period. Third, the salmon prices are expected to increase slightly from the
current levels while feed cost is expected to decrease due to MHG’s
upstream integrations into feed production. MHG’s harvest volumes are
expected to increase in line with historical growth consolidation and
limitations of licenses taken into account. Fourth, the income growth from the
VAP market is predicted remain strong, much due to the acquisition of
Morpol in 2013. Fifth, the cost of capital is expected to remain relatively low
as a result of historically low interest rates in the Norwegian economy that is
expected to persist. The risk associated with an investment in MHG is
moderate, considering MHG’s strong financial position and that the food
industry is less volatile than the overall market. Last, the fundamental
valuation suggests that the fair share price of MHG is NOK 125, which is also
supported by the relative valuation. Hence I conclude that MHG is slightly
undervalued at the current trading price, and a buy recommendation is
appropriate. | nb_NO |
