SalMar ASA : uncertain times

This master thesis is the final assignment of the double degree program in Master of Science of business at BI Norwegian Business School and Catolica Lisbon School of Business and Economics. The aim of this thesis is to assess the share price value of SalMar ASA by applying valuation frameworks. The goal is to decide whether the company is an attractive investment or not, and determine if investors should buy, hold or sell shares of the company. My decision will be compared to an experienced investment bank`s recommendation and discussed. The investment bank chosen is ABG Collier Sundal. SalMar is a Norwegian salmon farming company. The company is noted on Oslo Børs Stock Exchange (OSEBX) with a share price of 258 (31st of December 2016). The farming industry in Norway has recently benefitted from high salmon prices and increased demand. However, the industry is characterized by limited growth opportunities and is subject to major risk factors relating to biological conditions. After applying the free cash flow to the firm approach, the equity value constitutes 288 NOK per share, while the relative valuation suggests that the company is overvalued. In conclusion, I recommend a hold position. ABG considers a hold position as well, however the company has a target share price of 242 NOK as of 31st of January 2017. The main difference between my result and ABG`s is that they are blending their DCF valuation with their relative valuation, and is applying a higher WACC