DISCOUNTED CASH FLOW VALUATION OF OSOTSPA LIMITED COMPANY

Abstract

OSP is a company with almost 130 years of history. It is considered one of the largest Thai companies, listed on the SET50. Its core business is separated into three main segments: non-alcoholic beverages, personal care, and others. The discounted cashflow (DCF) valuation method was selected to estimate the share value of Osotspa Public Company Limited based on its expected future cash flows. Key elements of the financial statement were forecasted based on the financial statement, the industry trends, and OSP’s announced strategies. The CAPM model was used to compute the cost of equity, which was used in the WACC calculation. It was determined that the target price for OSP stock was THB 39.40, providing potential upside of 4% on THB 38.00 per share as at 18th Dec 2020. With the sensitivity analysis, it was determined that the intrinsic share price could range from THB 26.71 to THB 46.01, depending on the assumptions of WACC and terminal growth. This range provides an upside potential of 21% and downside risk of 30%. As the buy signal from the target price is not strong, the recommendation to investors is to HOLD the stock.