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Category: Investing in stocks

Master Thesis – Valuation of Pandora: Fair Price Estimation Based on Strategic and Financial Analysis


The principal objective of this master thesis is to estimate the fair price of one Pandora share as of 31 December 2011 on a stand-alone basis. Valuation is conducted through strategic and financial assessment.

Investors were excited to participate in the Denmark’s largest initial public offering in sixteen years and in a less than a year were “shocked” to find a sudden change in revenue and profit trend. The reaction was extraordinary – share price lost two thirds in just one day. This master thesis tries to estimate whether market priced Pandora’s stock objectively or it was just a temporary overreaction.

Pandora became the third largest world jewelry company in a relatively short period. Company is atypical among largest jewelry players to operate without retail operations and focus on manufacturing. Pandora stands out to be a rare player to get such a wide acknowledgment by affordable jewelry consumers. Exceptional product charm is the primary value driver and the largest danger.

Strategic analysis shows that Pandora overcomes external environment and jewelry industry challenges with unique resources: successful product charm, state-of-the-art production facilities, inexpensive production team in Thailand, in-house designers from Denmark, revolving credit facility, highly valued brand; and core competences: extensive manufacturing experience, abilities to scale the craftsmanship, abilities to enter new markets, strong financial consolidation and control functions and win-win retail proposal.

Financial analysis reveals that Pandora reached the point when customers are not ready to pay for affordable jewelry more and should lower current prices to keep the volume stable. New markets and particularly emerging countries should remain being the most important contributors to growth, but there is a threat that the company will not be able to stabilize the revenues from mature markets. Pandora has superior profitability comparing with peers, but not sustainable in the long-term. Pandora’s ROIC is considerably higher than peers’, but has been gradually decreasing and approaching the industry average.

The fair price of 132 DKK per one share on 31 December 2011 is estimated with probability weighted scenario discounted cash flow value driver model. Valuation is also examined with alternative discounted cash flow models (economic profit, NOPLAT convergence, exit multiple, FCF perpetuity) and peer multiples. The outcome is tested with sensitivity analysis. Different scenarios are modeled to determine pessimistic (40 DKK) and optimistic (302 DKK) values.

The fair price is 144% higher than the market price of 54 DKK/share on 31 December 2011. The recommendation depends on the investment horizon. Investors are recommended to buy shares with long-term investment horizon and should hold shares or be aware of high volatilities in the short (from one to two years) period.
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Imimobile Shares Sold Before Annual Results

Just in two days Imimobile stock price increased by +10%, thus it was time to make a decision – sell the shares and fix the +15% profit. Fly with the trend. Use the momentum. Act spontaneous on the surface, but have the calculations behind. Yes, company results are great, but not to justify that high leap in the price. All the sudden raise in the price is of course attributable to the upcoming yearly results on 23 June 2016. Lets see what do they promise.

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Quantum Pharma (QP.) investment

Quantum Pharma results are coming in few days, CEO is proclaiming successful strategic acquisitions, so perhaps it is time to enter the position. Revenues of the company grew by stunning 61% over the last three years, company aims to vertically integrate, so perhaps it might continue strengthening its positions. The two serious worries are “falling knife” and huge irresponsible indebtedness. Do pluses weight over the minuses? Continue reading

Again buying Imimobile (IMO) after it acquires Archer Digital in South Africa

Imimobile just acquired South African company and is ambitious to grow strong. Perhaps it is time to buy, since the half year results are coming in December, director expressed confidence in the results, multiples are also attractive, progressive sector. All the indicators suggest it might be a good investment. Lets go for that!

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Imimobile Is Sold With Profit

Imimobile surpassed the expectations and the defined target price. Annual results already published, summer is coming and it is time to relax and stay free from the invetments. Although annual results were better than predicted, there is no surprise element at the moment in the shares. It is time to sell and fix the profit. Continue reading

Imimobile (IMO) – first stock investment

Time to make a first investment. After a thorough research Imimobile sounds the one to be the first baby. It has demonstrated impressive growth of revenues, takes a share in the attractive and progressive mobile technologies sector, recently made acquisition and directors are positive about the growth. Why not to give it a try, when company soon will publish the results and it might surprise the market with its potential?\r\n Continue reading

Investing Rules

Every game needs rules. And definitely every investment needs rules. Already tried before to act spontaneously and it did not work. Lets start strong this time. Lets build the portfolio with the set of rules and rich grounding investment philosophy. For now we will have 32 investment rules.

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Lets Start Investing With Investorship

Hello investors (or potential future investors). Hello myself as a child investor, who wants to grow and live from investments. Hello to the collaborative development between investors. Welcome on board! The Investorship is ready to start – it is my personal journey to which you are more than welcome to join, learn from it or add your insights. Everything is ready to go – initial capital of £1000, trader’s account at, desire to invest and hopefully necessary habits to be successful. Lets start investing.

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