Publicação
Equity research Sonae SGPS S.A. : a divestment scenario in times of uncertainty
| Resumo: | The present document consists of a report of an Equity Research on Sonae SGPS, S.A. (SON). This document was used in the CFA Institute Research Challenge 2021, obtaining a 2nd place at the local level. The report contains only public information until 14/01/2021. In addition to the standard format chosen, this report has one additional chapter, that explores the consequences of a divestment of the group’s fashion business unit. In this analysis using the precedent transactions method, we find that investors may face a sizable investment opportunity that would allow the group to rotate its assets and to free up capital. SON is a Portuguese conglomerate, comprised of eight business units (BU) that go from food and non-food retail to commercial real estate and telecommunications. The company was valued with a Sum-of-the-Parts approach, where a discounted cash flow approach was developed for most business units, reflecting all of its idiosyncrasies. For the smaller BUs, relative valuation methods were employed. The valuation yielded a buy recommendation with a price target of 1.25€/sh for 2021YE, comprising an upside potential of 75% from the January 14th, 2021 closing price of 0.71€, with medium to low risk. To support this valuation, other methods were also used, such as Relative Valuation. |
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| Autores principais: | Borralho, Ana Mafalda Bento |
| Assunto: | Equity Research Valuation Retail Conglomerate Avaliação de Empresas Retalho Conglomerado |
| Ano: | 2021 |
| País: | Portugal |
| Tipo de documento: | dissertação de mestrado |
| Tipo de acesso: | acesso aberto |
| Instituição associada: | Universidade de Lisboa |
| Idioma: | inglês |
| Origem: | Repositório da Universidade de Lisboa |
| Resumo: | The present document consists of a report of an Equity Research on Sonae SGPS, S.A. (SON). This document was used in the CFA Institute Research Challenge 2021, obtaining a 2nd place at the local level. The report contains only public information until 14/01/2021. In addition to the standard format chosen, this report has one additional chapter, that explores the consequences of a divestment of the group’s fashion business unit. In this analysis using the precedent transactions method, we find that investors may face a sizable investment opportunity that would allow the group to rotate its assets and to free up capital. SON is a Portuguese conglomerate, comprised of eight business units (BU) that go from food and non-food retail to commercial real estate and telecommunications. The company was valued with a Sum-of-the-Parts approach, where a discounted cash flow approach was developed for most business units, reflecting all of its idiosyncrasies. For the smaller BUs, relative valuation methods were employed. The valuation yielded a buy recommendation with a price target of 1.25€/sh for 2021YE, comprising an upside potential of 75% from the January 14th, 2021 closing price of 0.71€, with medium to low risk. To support this valuation, other methods were also used, such as Relative Valuation. |
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