Discounted cash flow valuation of central plaza hotel public company limited.

Abstract

This thematic paper demonstrated how to value the stock price of Central Plaza Hotel Public Company Limited (CENTEL) which applied the concept of the free cash flow to firm (FCFF) model. It reflected the company’s ability generate free cash flow without debt. I applied discounted cash flow valuation method to express the value of the company’s stock. We consider using FCFF valuation as it is the most appropriated method for valuation. Free cash flow to firm represent the value of firm’s activities that come from the root of firm’s value derived from future earnings. As a result the CENTEL target price from forward FCFF method is 43.85 THB, comparing to the current price of 35.50 THB, therefore we recommend BUY and HOLD.

KEY WORDS: Central Plaza Hotel / Valuation / Discounted cash flow Valuation / Hospitality / Quick service Restaurant