Equity Valuation

: IMPRESA

Abstract

The Portuguese group Impresa SGPS is one of the main players in the media industry which manages different companies in that industry. It operates in three segments: television, publishing and digital. The group is facing several challenges. On the one hand the economic crisis and the austerity measures directly influence the available income of costumers/ companies. Apart from that, companies have difficulties in accessing credits and the advertising revenues are decreasing. On the other hand the possible privatization of RTP1 leads to an increase of the competition among FTA Channels. Finally, the significance of the publishing sector is negatively impacted by the digital migration. APV is the model used to value the Impresa group since it is a cyclical company and its capital structure will change in the future. This is due to the fact that currently the group is highly leveraged but a gradual reduction is expected in the coming years. Following from my analysis I concluded a price per share of 0.31€, which means a potential loss of around 26% when compared to their current price per share. The major reasons for this price are the cut of the Portuguese long-term government bond which increases the Country Risk Premium used in Ra and the weak forecasts for Media companies. Lastly, the negative EBIT in 2011 led Impresa to a Rating of D which is definitely the main cause since its bankruptcy costs are huge.

Date of Award	2012
Original language	English
Awarding Institution	Universidade Católica Portuguesa
Supervisor	José Carlos Tudela Martins (Supervisor)