RELATIVE VALUATION OF OSOTSPA PUBLIC COMPANY LIMITED

Abstract

This thematic paper demonstrates the assessment of Osotspa Public Company Limited (OSP) stock’s value based on relative valuation method. This multiple based valuation is commonly applied to identify a potential under or overvaluation of a corporation’s share price to that of its competitors or industry peers. The peers median Price to Earnings per share (P/E), Price to Book Value (P/BV) and Enterprise Value to EBITDA (EV/EBITDA) multiples were used to forecast the target prices at year ended 2021 and 2022. I recommend to use trailing P/E multiple for OSP as it is most useful ratio when comparing same industry companies and suitable in the case of stable profits, in which beverage companies are more likely to have stable profits. As a result, OSP target price at year ended 2021 and 2022 based on trailing P/E multiple are 29.73 THB and 31.04 THB. Based on the recommendation criteria, the target prices are 26.01% and -17.77% downside respectively; exceed the 10% downside from the current price of 37.75 THB (as of 2nd July 2021). Therefore, I would recommend to SELL the overvalued stock.