| Author | Worakit Chutimarat |
| Call Number | AIT RSPR no.SM-24-05 |
| Subject(s) | Business enterprises--Thailand--Finance--Case studies
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| Note | A research submitted in partial fulfillment of the requirements for the degree of Master of Science in International Finance |
| Publisher | Asian Institute of Technology |
| Abstract | Discounted cash flow valuation (DCF) has been well applied by independent financial advisors (IFA) in Thailand to identify fair values of target companies as a critical part of IFA reports proposed to shareholders of listed companies in the Stock Exchange of Thailand (SET) in respect to their associated merger-and-acquisition (M&A) activities. DCF seems conceptually not complicated by summing up the present value of free cash flow expected from the target company over a period of time. However, in practice, practitioners of DCF are subject to several challenges and uncertainties. MAKRO, a SET listed company, has been involved in two M&A transactions in 2013 and 2021 and the four detailed DCF valuation of MAKRO in respect to the transactions are publicly disclosed. The study period of 2013-2023 (i.e., 11 years) which the actual performance of the economy, the stock exchange, and the company are officially available shall contribute to a better understanding of DCF’s practical challenges for M&A activities in Thailand. Therefore, this research selects MAKRO’s valuations as the case study. The study results show that long-term financial projections of MAKRO are likely to diverse from its actual financial performance due to changes in business plan and operational limitations , the discount rates which equates to weighted average cost of capital of which the cost of equity applying CAPM are likely to fluctuate, the terminal values are significantly contributed to the overall DCF enterprise value, the identification of company steady state is critical to the valuation process, the sensitivities of DCF models vary among models but the key sensitive items seems similar. However, looking back in perspective, DCF concept is still valid but it should seek ways to reduce the gap between the assumptions (also, the forecasts) and the actual results. For future studies, the appropriate market return applied in CAPM for cost of equity (specific to SET-listed companies) and the determination of company’s steady state are interesting topics. |
| Year | 2024 |
| Type | Research Study Project Report (RSPR) |
| School | School of Management |
| Department | Other Field of Studies (No Department) |
| Academic Program/FoS | Master of Science in International Finance (M/Msc IF) |
| Chairperson(s) | Endress, Tobias; |
| Examination Committee(s) | Levermore, Roger;Khan, Syed Shurid; |
| Scholarship Donor(s) | Royal Thai Government Fellowship; |
| Degree | Research Studies Project Report (M. Sc.) - Asian Institute of Technology, 2024 |