Equity valuation

: Cofina, SGPS

Abstract

Equity valuation has been highly debated among academics and practitioners. There are many approaches and choosing the right one can be a challenge, making valuation to be considered more an art than a science. This dissertation aims to obtain the price target of Cofina, a Portuguese leading company in media sector. To achieve this goal we had to understand how equity valuation can be conducted and search the best approach to value Cofina. By discussing the main valuation literature and Cofina’s characteristics, we chose to apply the Discount Cash-Flow method, using Adjusted Present Value approach. A relative valuation was also performed which revealed to be useful as a complement of the DCF valuation. Our results were compared to Caixa BI Investment Banking. Different methods and assumptions were used but quite similar results were obtained. While we reached a final price target of 0.78€, Caixa BI set a price target of 0.70€. Consequently, we recommend investors to buy. With this valuation we can conclude that Cofina’s shares are undervalued and trading at a discount, since they were listed in 0.62€ in 31st January of 2014.

Date of Award	2014
Original language	English
Awarding Institution	Universidade Católica Portuguesa
Supervisor	José Carlos Tudela Martins (Supervisor)