Equity Research: Cimpor

MASTERS OF SCIENCE IN BUSINESS ADMINISTRATION

EQUITY RESEARCH: CIMPOR
TOMÁS LAVIN PEIXE 152110052

ADVISOR: PROF. JOSÉ TUDELA MARTINS

Dissertation submitted in partial fulfillment of requirements for the degree of International MSC in Business Administration, at Universidade Católica Portuguesa, September, 2012

I. Preface The goal of this dissertation is to value Cimentos de Portugal, SGPS, S.A, hereon stated as Cimpor. In order to do that, the main valuation methods and theories will be reviewed and consequently applied to deliver an investment recommendation regarding FY2012 stock price. The structure of this dissertation is divided into eight main sections: I. In the first section -executive summary- an equity research report will be presented summarizing Cimpor’s valuation as well as my final recommendation; II. In section two -literature review- I will start by explaining the main role of valuation and then discuss the five major steps to value a firm (understanding the business, forecasting company performance, selecting the valuation model, converting forecast into valuation and making the investment decision); III. In the third section, a detailed analysis of Cimpor will be presented covering the following topics: history, geographic diversification, growth strategy, shareholder structure, share performance and dividend policy; IV. In the fourth section, an overview of cement industry will be done including an analysis of both past trends and future perspectives. Moreover, the main players and the Porter’s five forces analysis will be introduced; V. Section five will show the main macroeconomic indicators needed to perform the valuation; VI. In section six, Cimpor’s valuation will be computed through a DCF WACC based approach. In addition, a sensitivity analysis will be done as well as a relative valuation using EV/EBITDA and P/E multiples; VII. In section seven, my own assumptions and results will be

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