Yamama Cement Company Valuation
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RESEARCH PAPER
VALUATION OF THE YAMAMA SAUDI CEMENT COMPANY (YSCC)
Table of Contents
1. Introduction ……………………………………………………………………… 3-4
2. The Saudi Cement Industry …………………………………………………….. 4-5
3. The Yamama Saudi Cement Company…………….…………………………... 6
4. Company Valuation ……………………………………………………………... 7-11
4.1. The Free Cash Flow Model (FCF) ………………………………………... 7
4.2. The Dividend Discount Model (DDM) …………………………………… 8 4.3. The Discounted Cash Flow Model (DCF) ………………………………... 8-9 4.4. Key Indicators ……………………………………………………………... 9-10 4.5. Peer Comparison …………………………………………………………... 10-11
5. Conclusion ………………………………………………………………………. 12
6. References ………………………………………………………………………. 13
7. Appendix ………………………………………………………………………... 14
1. Introduction
Valuation, in finance, is the process of estimating what something worth. Valuations are needed for many reasons such as investment analysis, capital budgeting, merger and acquisition transactions, and financial reporting.
Corporate Valuation methods can be grouped into four categories: 1. Financial Reports Methods, such as the financial ratio analysis, that provide information about the financial performance of the firm, which can be used by different stakeholders to evaluate the firm’s performance and help them on taking investment and financing decisions. 2. Cash Flow Methods, such as the discounted cash flow model (DCF) and the dividend discount model (DDM), that evaluate the firm based on its general cash flows during a long-period of time. 3. Market Methods, such as the price/earnings ratio and earnings multiples, that evaluate the firm through comparing its financial performance to the performance of other companies that belong to the same branch, similar in size and technology, or produce and sell similar products. But such methods depend heavily on earnings that are subject to
RESEARCH PAPER
VALUATION OF THE YAMAMA SAUDI CEMENT COMPANY (YSCC)
Table of Contents
1. Introduction ……………………………………………………………………… 3-4
2. The Saudi Cement Industry …………………………………………………….. 4-5
3. The Yamama Saudi Cement Company…………….…………………………... 6
4. Company Valuation ……………………………………………………………... 7-11
4.1. The Free Cash Flow Model (FCF) ………………………………………... 7
4.2. The Dividend Discount Model (DDM) …………………………………… 8 4.3. The Discounted Cash Flow Model (DCF) ………………………………... 8-9 4.4. Key Indicators ……………………………………………………………... 9-10 4.5. Peer Comparison …………………………………………………………... 10-11
5. Conclusion ………………………………………………………………………. 12
6. References ………………………………………………………………………. 13
7. Appendix ………………………………………………………………………... 14
1. Introduction
Valuation, in finance, is the process of estimating what something worth. Valuations are needed for many reasons such as investment analysis, capital budgeting, merger and acquisition transactions, and financial reporting.
Corporate Valuation methods can be grouped into four categories: 1. Financial Reports Methods, such as the financial ratio analysis, that provide information about the financial performance of the firm, which can be used by different stakeholders to evaluate the firm’s performance and help them on taking investment and financing decisions. 2. Cash Flow Methods, such as the discounted cash flow model (DCF) and the dividend discount model (DDM), that evaluate the firm based on its general cash flows during a long-period of time. 3. Market Methods, such as the price/earnings ratio and earnings multiples, that evaluate the firm through comparing its financial performance to the performance of other companies that belong to the same branch, similar in size and technology, or produce and sell similar products. But such methods depend heavily on earnings that are subject to