RELATIVE VALUATION OF HOME PRODUCTION CENTER PUBLIC COMPANY LIMITED.

Abstract

This thematic paper demonstrated how to value the stock price of Home Production Center Public Company Limited (HMPRO) by using the concept of Relative Valuation. The stock price was calculated from Enterprise Value to Earning before Interest and Tax and Depreciation and Amortization (EV/EBITDA) which is a measurement of a company’s stock price based on a company profitability in relative to industry. The process started with analyzing internal and external circumstances within the company, creating forecast, calculating a reasonable valuation and recommending to buy-sell-hold stocks. HMPRO is a home improvement retail chain which operate in Thailand and Malaysia. The company not only offers a wide range of products from both private and international brand but also operates the warehousing and distribution. HMPRO recently focused on private brand expansion and cost control rather than store expansion in order to improve profit margin. The reason is a decline in household purchasing power and a sluggish global growth. The result from this paper illustrates the fair price of HMRPO share price in relative to industry which is expected to be lower value than the current market price by 23%. Therefore, the result leads to my recommendation of “SELL” In conclusion, this valuation study is to estimate the intrinsic value of the company. However, there are some limitation of Relative Valuation method so that the value must be consider carefully.