| dc.description.abstract | The purpose of this thesis is to determine the fair value of Guinness Ghana Brewery Limited as at
the end of March 2022. We formulated the following problem statement: “What is the fair value
of Guinness Ghana limited at the end of March 2022?’’ The purpose of the valuation is to evaluate
if the stock price is either over or undervalued.
The first part of the thesis consists of the introduction of Guinness Ghana Brewery Limited, and
the environment in which it operates. It is then followed by the theories of valuation, the chosen
method, and strategic analysis of Guinness Ghana Brewery Limited was performed to understand
the company and the beverage industry in Ghana. The second part of the thesis further presents
the financial statements, a historical analysis, and reformulation of the financial statements.
Moving on, we combined the information from the strategic and financial analysis to forecast the
statement of income statement and financial position on which we did a valuation using a weighted
average cost of capital of 28.7%. We used the Free cash flow to firm (FCFF) method to find the
value per share of GHS 1.44 complemented by scenario-based analysis which revealed that in the
worse-case scenario, the share price will be GHS 1.22 and sensitivity analysis showed a minimum
price of GHS 0.97 and a maximum price of GHS 2.79 when WACC and the growth rate are
changed at various levels.
We, therefore, recommend that investors should sell or reduce their shares of Guinness Ghana
Breweries limited as the share price is overvalued because the intrinsic share price of GHS1.44 is
lower than the market value of GHS 2.25. | |