Equity valuation of Continental AG

Abstract

The subsequent master’s thesis comprises a valuation of the equity stake of Continental AG (Conti), a German 1st tier automotive supplier which is globally active through its Automotive, Tire as well as ContiTech divisions. Therefore, the current state of the art concerning the field of equity valuation is presented and the most appropriate methods for Conti are chosen. Those are a Discounted Cash Flow (DCF) approach with the Weighted Average Cost of Capital (WACC) and a multiples approach using the Sum of Parts (SOP) of Conti’s single divisions. Subsequently, a profound analysis of the automotive industry as well as an internal analysis of Conti itself is presented. Afterwards, the main part of the thesis presents the drafted financial model and issues the in-vestor a hold recommendation with a target share price of EUR186 dated on 31st December 2016. This evaluation also includes a sensitivity analysis considering various scenarios for the business development of Conti and a Value at Risk (VaR) assessment using a Monte Carlo simulation for predicting the maximum possible daily loss respectively gain. Moreover, a com-parison of the author’s valuation and a valuation of Exane BNP Paribas is composed.

Date of Award	13 Feb 2017
Original language	English
Awarding Institution	Universidade Católica Portuguesa
Supervisor	Henrique Miguel Ribeiro Guimarães Bonfim (Supervisor)