DISCOUNTED CASH FLOW VALUATION OF MEGA LIFESCIENCES PUBLIC COMPANY LIMITED

Abstract

This thematic paper aims to estimate the intrinsic value of Mega Lifesciences Public Company Limited (MEGA) by using discounted cash flow valuation method (FCFF). The estimated share value should reflect the company’s fundamentals, expected future performance and the risk. MEGA is operating in developing countries or emerging markets, and the nominal GDP growth of these countries are relatively high. I expect that this will lead to high demand for dietary supplement products as the company’s sales is directly related to disposable income based on historical information. The target price on December 31st, 2020 of MEGA was estimated to be 43.17 baht with an upside of 27% when compared to the market price 34 baht on November 13th, 2020. Accordingly, we recommend to BUY. Another important move that MEGA made recently in order to bring the company further growth was acquiring PT Futamed Pharmaceuticals, a manufacturing plant in Indonesia, so that it can sell new drugs and technologies in the Indonesian market, and it also acquired Sando. Ultimately, we hope that this study will be useful and able to guide interested investors regarding the intrinsic valuation of Mega Lifesciences Public Company Limited.