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Valuation of VOW ASA : a fundamental analysis of a company turning waste into value

Morthen, Filip; Mæland, Olav Aase
Master thesis
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URI
https://hdl.handle.net/11250/2681177
Date
2020
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  • Master Thesis [3258]
Abstract
The aim of this thesis is to obtain an unbiased target price of Vow ASA by applying a three-stage

weighted average cost of capital model, supported by a relative valuation approach. We conduct a

thorough analysis of key aspects with the industries they deliver solutions to and significant

company-specific factors. Necessary assumptions based of the analysis are made to forecast future

performance of the company and to finally carry out the valuation.

Based on the global environmental “mega-trend” in the cruise and aquaculture market, companies

delivering solutions to environmental problems have experienced substantial growth in demand the

recent years. Driven by governmental pressure, higher prices of carbon, and an increased focus on

sustainability, these trends are expected to continue. Having experience, a solid customer base and

well-developed technology Vow ASA is well positioned in these markets. With a record high backlog,

containing cruise, aquaculture and land-based projects Vow is set to continue and possibly accelerate

their growth going forward as they are entering new land-based industries.

Taking these factors into account our fundamental valuation yields an estimated share price of NOK

19.6 for Vow ASA. Supported by a relative EV/EBITDA and Price/sales valuation, the analysis indicates

a downside to the quoted stock price. Although the results contain a great amount of uncertainty

which is revealed through a sensitivity analysis, we conclude that Vow is currently overvalued, and

we would as of 31/12-2019 come with a sell recommendation.

Due to the impact the Covid-19 virus had on the stock market and expected future revenue streams

we have chosen to do the valuation based on the stock price and available data as of 31/12-2019.

Events that took place in the winter/spring of 2020 will be addressed to further confirm or disconfirm

our final price target.

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