| dc.description.abstract | This dissertation is an analysis and valuation of Acta Holding ASA. Acta Holding ASA is a financial service group providing both corporate and household investors with savings and investment solutions and advisory. Financial service firms offer some challenges in terms of the valuation process when key inputs to the traditional model fail to materialize. Also, the industry tends to be heavily regulated, and the legislations may impose restrictions and inhibit growth, and hence should be incorporated into the value if possible. Due to the financial state of Acta, this valuation encounters further challenges.
The subprime crisis caused a downturn in Acta resulting in negative earnings, which make the estimation of future cash flows difficult. These particular challenges will be the focus of this dissertation, as the knowledge obtained from the valuation process can be just as valuable as the numerical outcome.
To answer the problem statement and to extract the intrinsic value of Acta, a fundamental valuation approach will be performed. This entails an extensive analysis of both the business and its environment, starting with a general introduction, followed by a strategic analysis. This analysis revealed a threatening future for Acta, but also that a strong brand name and further product development can take the edge of the toughest competition. Next, a financial analysis of past performance and risk will be conducted, under the assumption that the past is relevant to the future. The financial analysis revealed a considerable spread in performance, and a company that is clearly suffering from the repercussions of the financial crisis.
With much uncertainty about the future and low correlation with past performance, the foundation for the value estimate and hence the value estimate may suffer from considerable uncertainty. The DCF approach delivered a value estimate of NOK 5,60 per share. But, as the analysis revealed, this estimate cannot be used indiscriminately and is very sensitive to changes in key drivers. The intrinsic value will probably be somewhat lower than NOK 5,60, but it should still exceed the market price of NOK 3,14. | en_US |
