Valuation of Grieg Seafood

Abstract

The purpose of this thesis was to determine the intrinsic value of Norwegian salmon farming company Grieg Seafood as of 01.01.2019. The closing price of Grieg Seafood on 31.12.2018 was 102.30 NOK/share. The information used in writing this thesis is public information published prior to the cut-off date of 01.01.2019. A strategic analysis of Grieg Seafood and the salmon farming industry was performed, giving input to a discounted cashflow valuation model. Important considerations include forecasting free cashflows to firm, discount rate (weighted cost of capital (WACC)) and continuing value (terminal value) growth rate. The discounted cashflow valuation indicated an intrinsic value of 111.69 NOK/share. A relative valuation was performed to supplement the discounted cashflow valuation. An arithmetic average of relative valuations based on P/E, P/B and EV/EBIT indicated a share price of 114.79 NOK/share. A sensitivity analysis was performed, studying how changes to the WACC and continuing value growth rate impact the discounted cashflow valuation. It was also studied how the valuation changes as different salmon prices are applied to the model.