Relatives valuation of the Erawan group public company limited.

Abstract

This thematic paper purposes to explain and apply the relative valuation of my selected company, The Earawan Group Public Company Limited (ERW). REW operates in investing and developing hotel properties in strategic location throughout Thailand and ASEAN. They continue its investment plan as set forth in our 5 years master plan (2016-2020. Furthermore, ERW strongly believe in their strategy which focus in high growth market and high growth return segment together with their continuous asset improvement program to enhance the competitiveness of their hotel. By using the Relative Valuation, it helps to value the Erawan Group. The relative valuation techniques are used to find a fair price of ERW in 2019 through three ratio measurement including Price to Earnings Ratio (P/E), Price to Book Value Ratio (P/BV) and Enterprise Value to Earnings before Interest, Taxes, Depreciation and Amortization Ratio (EV/EBITDA). These metrics are calculated based on forecasted financial statement, the target price of ERW in 2019 based on EV/EBITDA metric is 5.40 Baht per share, which is undervalue when compared to the ERW current stock price as of November 23, 2018 at 6.45 Baht per share. Thus, ERW share price is downside about 16.33%, I recommend to “SELL”.