Altri

: Equity Research

Abstract

The following Dissertation has the aim of giving a proper insight into business valuation theory. The work consists on valuing Altri, a specialized pulp producing company listed on the Euronext Lisbon stock exchange. I end up with an analysis and comparison between my own valuation results and an independent valuation, made by the Millennium BCP Investment Bank. Both valuations target a stock price for YE 2010, both taking into account the published information until the company‟s 2nd quarter (2010) results release. The work proposed above was structured in the following way: Literature review - This section consists on a review of the existent valuation theories and respective methodologies, grasping, at the same time, the different views observed between academics and finance practitioners. My intention was to broaden the review long enough to discuss some basic valuation concepts, while also narrowing it down just enough to focus on the most important subjects for my valuation case. I have assumed that the subjects and concepts approached in this review are well known for a reader familiar with financial theory. Therefore, I will not proceed to unnecessary finance demonstrations, transcription of known valuation formulas or other previous concepts that originate the issues that are discussed. Industry and company analysis - As an introduction to the valuation itself, I present the current industry scenario and company specific information, critical not only to the valuation itself, but also to a proper understanding of the Company‟s business, as it is. Company valuation - This section intended to show the results derived from my valuation. I try to detail, as much as possible, how the valuation model was built and how the required business assumptions were supported. This includes both the cash-flows projections and used discount rates, taking also into account that, as one may see later on, two different businesses and two DCF valuation methodologies were applied. I have also decided to complement the valuation with a dedicated part to sensitivity analysis. Valuation through the use of multiples - This methodology was introduced not in order to substitute the previous DCF methodologies but rather to complement them, establishing a set of price targets, dependent upon the multiples and peer group chosen. Investment Banking valuation analysis and comparison – On this section, the final valuation results were compared against an equity research report made by Millennium BCP Investment Bank. This comparison intends to expose the differences resultant from the use of different valuation methods and assumptions made by the investment bank‟s analyst and me. I intend therefore to make a critical appraisal over the analyst‟s valuation assumptions.

Date of Award	2011
Original language	Portuguese
Awarding Institution	Universidade Católica Portuguesa
Supervisor	José Carlos Tudela Martins (Supervisor)