Coca-Cola Amatil (CCL) was listed in ASX on January 01, 1970 and the present market price of its share is $11.74. The purpose of this report is to estimate the value of the company by forecasting the performance and applying the 4 (four) valuation techniques namely Dividend Discount Model, Discounted Cash Flow Model, Discounted Abnormal Earnings Valuation Model and Discounted/Residual Operating Abnormal Earnings Model. The report will also discuss the possible improvement opportunities for CCL and the likelihood challenges that CCL might face in the coming days.
I. PROSPECTIVE ANALYSIS:
A wide range of macroeconomic and other factors, as outlined in the group assignment, are considered to forecast the accounting numbers over a period from 2011 to 2016 to conduct the valuation of CCL. (Appendix 1) The rational of the forecasted figures are discussed below:
While forecasting sales, the growth over the next six years is estimated at an average of 3.75%. CCL’s sales made an impressive growth of 7.64% in 2009 and later went down to 1.94% in 2010 mainly due to GFC. Appendix 2 shows that CCL’s major growth resulted from the beverage business and the food and service business could not do that well. This was considered while forecasting the sales growth. Other revenue is also not considered.
Keeping the expansion program of $100.00 million over a period of three years in Indonesia wherein the first $100.00 million resulted an increase of $84.00 million in 2010, and other expansion programs, the growth is estimated to increase to 4.44% by 2013. A conservative approach in estimating the growth and subsequent decline to 3.44% by 2016 may be attributed to the factors that Australian currency is getting stronger, average performance in food and service segment, rising awareness about the healthier drinks, increase in interest rate as the economy is booming and also the competition in the market.
Asset Turnover (ATO):
The ATO... [continues]
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