Discounted cash flow valuation of the Erawan group public company limited.

Abstract

This thematic paper demonstrated how to value the stock price of The Erawan Group Public Company Limited (ERW) 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 appropriate 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 ERW target price from forward FCFF method is 6.98 THB, comparing to the current price of 6.45 THB, therefore we recommend HOLD.