What do you think Ferrari is worth in Euros? Justify your recommendation based on current market...

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What do you think Ferrari is worth in Euros? Justify yourrecommendation based on current market multiples valuation and aDCF valuation.
2012 2013 2014 First Half 2015
Sales
Cars and Spare Parts (1) 1,695 1,655 1,944 1,007
Engines (2) 77 188 311 121
Sponsorship, Commercial and Brand (3) 385 412 417 212
Other (4) 69 80 91 46
Total Sales 2,225 2,335 2,762 1,387
Cost of Sales excluding Dep. and Amort. 961 964 1,217 592
Depreciation and Amortization Expense 238 270 289 130
Selling, General, and Admin. Expense 243 260 300 152
Research and Development 431 479 541 291
Other Operating Expense 17 -2 26 4
  Operating Income (EBIT) 335 364 389 218
Net Financial Income (Expense) -1 3 9 -27
  Profit before Tax 335 366 398 191
Income Tax Expense 101 120 133 65
  Net Profit 233 246 265 126
Capital Expenditures 258 271 330 151
31-Dec-2013 31-Dec-2014 30-Jun-2015
Cash and cash equivalents 798 1,077 258
Trade receivables 206 184 154
Receivables from financing activities 863 1,224 1,181
Inventories 238 296 352
Other current assets 115 64 100
  Total current assets 2,219 2,845 2,045
Investments and other financial assets 37 47 48
Deferred tax assets 42 112 149
Property, plant, and equipment 568 585 589
Intangible assets (1) 242 265 283
Goodwill 787 787 787
  Total assets 3,895 4,641 3,900
Trade payables 486 536 578
Current tax payables 104 110 182
Other current liabilities 475 774 836
  Total current liabilities 1,065 1,420 1,595
Long-term debt 317 510 2,267
Other liabilities 197 233 239
Total equity 2,316 2,478 -201
  Total liabilities and equity 3,895 4,641 3,900
Total Revenue Capital Expend EBITDA Projected Growth Rate Market Value of Equity Total   Debt Cash
Auto Manufacturers
BMW 80,401 6,099 16,426 6.1% 56,562 77,506 7,688
Daimler 129,872 6,307 18,514 6.9% 77,906 86,689 15,543
Fiat Chrysler 96,090 8,121 8,271 4.6% 18,657 33,724 23,601
Ford Motor 108,619 5,626 8,537 10.1% 52,925 98,484 25,743
General Motors 117,554 8,946 6,674 4.5% 46,554 38,710 24,391
Honda Motor 96,196 6,374 12,730 6.9% 51,128 52,483 11,427
Hyundai Motor 63,924 3,385 7,233 6.8% 33,631 40,802 19,547
Kia Motors 33,730 1,446 2,800 1.6% 16,977 3,535 5,502
Nissan Motor 82,101 11,432 10,879 6.2% 40,013 51,796 6,698
Peugeot 53,607 2,428 3,318 7.0% 12,230 21,914 10,521
Renault 41,055 2,703 3,967 8.9% 23,096 36,299 14,049
Tata Motors 33,811 4,100 5,647 5.5% 16,701 10,952 7,125
Tesla Motors 2,411 731 9 94.9% 26,400 2,051 1,590
Toyota Motor 196,622 24,233 30,260 3.2% 186,069 147,344 40,497
Volkswagen 202,458 16,613 23,048 3.5% 52,916 139,021 34,143
Luxury Brands
Burberry Group 3,221 199 745 2.6% 7,691 90 865
Cie Financiere Richemont 10,410 708 2,902 3.1% 38,986 3,093 8,553
Hermes International 4,119 279 1,478 6.8% 35,297 41 1,481
LVMH Moet Hennessy 30,638 1,848 7,027 2.1% 80,731 9,243 4,648
Prada 3,552 362 954 1.9% 8,772 519 720
Tiffany & Co. 3,248 189 819 4.7% 9,125 989 648

Answer & Explanation Solved by verified expert

4.0 Ratings (815 Votes)

My answer is based on a few assumptions Assumptions 1 Ferrari is being valued in the second half of 2015 2 The balance sheet and income statement provided corresponds to Ferrari 3 The figures are in euros units With the data provided it is not possible to value Ferrari using DCF as it requires a lot of other information such as future revenue projections cost of debt cost of equity footnotes to balance sheet to understand each item etc It is hence easier to value using multiples method I See Answer

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Transcribed Image Text

What do you think Ferrari is worth in Euros? Justify yourrecommendation based on current market multiples valuation and aDCF valuation.201220132014First Half 2015SalesCars and Spare Parts (1)1,6951,6551,9441,007Engines (2)77188311121Sponsorship, Commercial and Brand (3)385412417212Other (4)69809146Total Sales2,2252,3352,7621,387Cost of Sales excluding Dep. and Amort.9619641,217592Depreciation and Amortization Expense238270289130Selling, General, and Admin. Expense243260300152Research and Development431479541291Other Operating Expense17-2264 Operating Income (EBIT)335364389218Net Financial Income (Expense)-139-27 Profit before Tax335366398191Income Tax Expense10112013365 Net Profit233246265126Capital Expenditures25827133015131-Dec-201331-Dec-201430-Jun-2015Cash and cash equivalents7981,077258Trade receivables206184154Receivables from financing activities8631,2241,181Inventories238296352Other current assets11564100 Total current assets2,2192,8452,045Investments and other financial assets374748Deferred tax assets42112149Property, plant, and equipment568585589Intangible assets (1)242265283Goodwill787787787 Total assets3,8954,6413,900Trade payables486536578Current tax payables104110182Other current liabilities475774836 Total current liabilities1,0651,4201,595Long-term debt3175102,267Other liabilities197233239Total equity2,3162,478-201 Total liabilities and equity3,8954,6413,900Total RevenueCapital ExpendEBITDAProjected Growth RateMarket Value of EquityTotal DebtCashAuto ManufacturersBMW80,4016,09916,4266.1%56,56277,5067,688Daimler129,8726,30718,5146.9%77,90686,68915,543Fiat Chrysler96,0908,1218,2714.6%18,65733,72423,601Ford Motor108,6195,6268,53710.1%52,92598,48425,743General Motors117,5548,9466,6744.5%46,55438,71024,391Honda Motor96,1966,37412,7306.9%51,12852,48311,427Hyundai Motor63,9243,3857,2336.8%33,63140,80219,547Kia Motors33,7301,4462,8001.6%16,9773,5355,502Nissan Motor82,10111,43210,8796.2%40,01351,7966,698Peugeot53,6072,4283,3187.0%12,23021,91410,521Renault41,0552,7033,9678.9%23,09636,29914,049Tata Motors33,8114,1005,6475.5%16,70110,9527,125Tesla Motors2,411731994.9%26,4002,0511,590Toyota Motor196,62224,23330,2603.2%186,069147,34440,497Volkswagen202,45816,61323,0483.5%52,916139,02134,143Luxury BrandsBurberry Group3,2211997452.6%7,69190865Cie Financiere Richemont10,4107082,9023.1%38,9863,0938,553Hermes International4,1192791,4786.8%35,297411,481LVMH Moet Hennessy30,6381,8487,0272.1%80,7319,2434,648Prada3,5523629541.9%8,772519720Tiffany & Co.3,2481898194.7%9,125989648


	2012	2013	2014	First Half 2015
Sales
Cars and Spare Parts (1)	1,695	1,655	1,944	1,007
Engines (2)	77	188	311	121
Sponsorship, Commercial and Brand (3)	385	412	417	212
Other (4)	69	80	91	46
Total Sales	2,225	2,335	2,762	1,387
Cost of Sales excluding Dep. and Amort.	961	964	1,217	592
Depreciation and Amortization Expense	238	270	289	130
Selling, General, and Admin. Expense	243	260	300	152
Research and Development	431	479	541	291
Other Operating Expense	17	-2	26	4
Operating Income (EBIT)	335	364	389	218
Net Financial Income (Expense)	-1	3	9	-27
Profit before Tax	335	366	398	191
Income Tax Expense	101	120	133	65
Net Profit	233	246	265	126

Capital Expenditures	258	271	330	151

	31-Dec-2013	31-Dec-2014	30-Jun-2015
Cash and cash equivalents	798	1,077	258
Trade receivables	206	184	154
Receivables from financing activities	863	1,224	1,181
Inventories	238	296	352
Other current assets	115	64	100
Total current assets	2,219	2,845	2,045
Investments and other financial assets	37	47	48
Deferred tax assets	42	112	149
Property, plant, and equipment	568	585	589
Intangible assets (1)	242	265	283
Goodwill	787	787	787
Total assets	3,895	4,641	3,900

Trade payables	486	536	578
Current tax payables	104	110	182
Other current liabilities	475	774	836
Total current liabilities	1,065	1,420	1,595
Long-term debt	317	510	2,267
Other liabilities	197	233	239
Total equity	2,316	2,478	-201
Total liabilities and equity	3,895	4,641	3,900

	Total Revenue	Capital Expend	EBITDA	Projected Growth Rate	Market Value of Equity	Total Debt	Cash
Auto Manufacturers
BMW	80,401	6,099	16,426	6.1%	56,562	77,506	7,688
Daimler	129,872	6,307	18,514	6.9%	77,906	86,689	15,543
Fiat Chrysler	96,090	8,121	8,271	4.6%	18,657	33,724	23,601
Ford Motor	108,619	5,626	8,537	10.1%	52,925	98,484	25,743
General Motors	117,554	8,946	6,674	4.5%	46,554	38,710	24,391
Honda Motor	96,196	6,374	12,730	6.9%	51,128	52,483	11,427
Hyundai Motor	63,924	3,385	7,233	6.8%	33,631	40,802	19,547
Kia Motors	33,730	1,446	2,800	1.6%	16,977	3,535	5,502
Nissan Motor	82,101	11,432	10,879	6.2%	40,013	51,796	6,698
Peugeot	53,607	2,428	3,318	7.0%	12,230	21,914	10,521
Renault	41,055	2,703	3,967	8.9%	23,096	36,299	14,049
Tata Motors	33,811	4,100	5,647	5.5%	16,701	10,952	7,125
Tesla Motors	2,411	731	9	94.9%	26,400	2,051	1,590
Toyota Motor	196,622	24,233	30,260	3.2%	186,069	147,344	40,497
Volkswagen	202,458	16,613	23,048	3.5%	52,916	139,021	34,143

Luxury Brands
Burberry Group	3,221	199	745	2.6%	7,691	90	865
Cie Financiere Richemont	10,410	708	2,902	3.1%	38,986	3,093	8,553
Hermes International	4,119	279	1,478	6.8%	35,297	41	1,481
LVMH Moet Hennessy	30,638	1,848	7,027	2.1%	80,731	9,243	4,648
Prada	3,552	362	954	1.9%	8,772	519	720
Tiffany & Co.	3,248	189	819	4.7%	9,125	989	648