Discounted cash flow valuation of Thai oil public company limited.

Abstract

This thematic paper aims to value the stock price of Thai Oil Public Company Lim-ited (TOP) base on discounted cash flow valuation method which has the concept that stock price of the firm should reflect its fundamental value in term of cash flow, growth and risk. Together with strong performance and competitive cash operating cost among peers including expectation of strong domestic oil demand growth in next year, we expect the bright future for TOP. As a result, the target price of TOP shall approximately equal to 83.0 Baht per share while the current price settles at 73.0 Baht per share; therefore, the valuation is indicative to BUY. However, there are variety of factors that are beyond control that would cause a fluctuation in price of refinery and petrochemical products which might be directly impact to company’s performance. In conclusion, the valuation study is to suggest company intrinsic value which the method still has some limitations. Therefore, the value must be consider carefully. However, the study can still provide guidance on processes of intrinsic valuation for investors and interested person in material construction companies.