Valuation of Kia Motors
Düsseldorf Business School at the Heinrich-Heine-University
5b
Value Management & Cost Management
Prof. Dr. Klaus-Peter Franz
Valuation of a company KIA MOTORS
By: Youngsook Kwon, Date: Jan 30, 2013
Table of Contents
1. Introduction 1 2. Valuation Methodology 2 2.1. Discounted Cash Flow 2 2.2. Terminal Value 3 2.3. Weighted Average Cost of Capital 3 2.3.1 Cost of Equity 4 2.3.2 Cost of Debt 4 2.4. Free Cash Flow 4 3. Calculation of WACC for Kia motors 5 4. Calculation of Free Cash Flow for Kia motors 5 5. Estimation of the value for Kia motors at the end of 2011 6 6. Conclusion 6 References 7 Appendix -1 8 Financial Highlight 8 Appendix -2 9 Consolidated Statements of Financial Position 9 Appendix - 3 10 Consolidated Statements of Cash Flows 10
1. Introduction
Kia motors is one of top 10 carmakers in the world. As this Korean automobil company is showing an impressive performance in such a highly competitive global market, even by newly included into the Best Global Brands 2012 Top 100, valuating this company will be an interesting subject.
Kia is a new addition to Best Global Brands Top 100 along with facebook, Prada, Ralph Lauren and Pampers. For the past few years, Kia has been one of fastest-moving global automotive brands. One of only three auto brands to increase US sales each of the past three years, sales are on the rise, even in a difficult market like Europe. Although the lineup is attractive to many cost-conscious consumers, the brand has built a particularly strong connection with Millennials and Gen Y audiences. A more aggressive front end design with the brand’s trademark tiger nose grille helps give Kia an edge that attracts younger drivers and also differentiates it from sister brand, Hyundai.
When it comes to valuating companies for a going concern company like Kia motors, DCF method will be suitable.
5b
Value Management & Cost Management
Prof. Dr. Klaus-Peter Franz
Valuation of a company KIA MOTORS
By: Youngsook Kwon, Date: Jan 30, 2013
Table of Contents
1. Introduction 1 2. Valuation Methodology 2 2.1. Discounted Cash Flow 2 2.2. Terminal Value 3 2.3. Weighted Average Cost of Capital 3 2.3.1 Cost of Equity 4 2.3.2 Cost of Debt 4 2.4. Free Cash Flow 4 3. Calculation of WACC for Kia motors 5 4. Calculation of Free Cash Flow for Kia motors 5 5. Estimation of the value for Kia motors at the end of 2011 6 6. Conclusion 6 References 7 Appendix -1 8 Financial Highlight 8 Appendix -2 9 Consolidated Statements of Financial Position 9 Appendix - 3 10 Consolidated Statements of Cash Flows 10
1. Introduction
Kia motors is one of top 10 carmakers in the world. As this Korean automobil company is showing an impressive performance in such a highly competitive global market, even by newly included into the Best Global Brands 2012 Top 100, valuating this company will be an interesting subject.
Kia is a new addition to Best Global Brands Top 100 along with facebook, Prada, Ralph Lauren and Pampers. For the past few years, Kia has been one of fastest-moving global automotive brands. One of only three auto brands to increase US sales each of the past three years, sales are on the rise, even in a difficult market like Europe. Although the lineup is attractive to many cost-conscious consumers, the brand has built a particularly strong connection with Millennials and Gen Y audiences. A more aggressive front end design with the brand’s trademark tiger nose grille helps give Kia an edge that attracts younger drivers and also differentiates it from sister brand, Hyundai.
When it comes to valuating companies for a going concern company like Kia motors, DCF method will be suitable.
References: Fernandez, P. and J. del Campo (2010a) “Market Risk Premium used in 2010 by analysts and companies: a survey with 2,400 answers,” downloadable in http://ssrn.com/abstract=1609563 Fernandez, P Adam Jonas, Morgan Stanley, Global Autos: A Wall Street View, Automotive News World Congress, Detroit, January 10th, 2012 Michael Annin, Equity Risk Premium Article, January/February 1998 issue of Valuation Strategies As of December 31, 2011, 2010 and January 1, 2010 (In millions of Won) For the years ended December 31, 2011 and 2010 -------------------------------------------- [ 4 ]. www.wikiwealth.com, November 10, 2012 [ 5 ]