DISCOUNTED CASH FLOW VALUATION OF PRIMA MARINE PUBLIC COMPANY LIMITED

Abstract

The valuation assessment on Prima Marine Public Company Limited (PRM) in this paper is conducted using discounted cash flow valuation method with the intent of finding an appropriate target price for the company which we can use to determine the extent of undervaluation or overvaluation of the company. The estimated share value should reflect the company’s fundamentals, expected future performance and risk. PRM's primary source of revenue is Floating Storage Units (FSU), which account for 54.8% of total revenue, followed by trading at 37.2%, offshore at 3.8%, and ship management at 4.2%. FSU revenue has an inverse relationship with crude oil prices because as the price of crude oil falls, demand for crude oil storage rises. When the price of crude oil rises, so does the need for crude oil storage. As a result, we expect crude oil prices to affect FSU demand, while PRM trading revenue is mostly based on domestic shipments of crude oil and petroleum chemical products. We anticipate that the capacity of the refinery will be related to PRM trading revenue. Another significant move taken recently by PRM to growth the company's expansion was the acquisition of Truth Maritime Company Limited (previously Thaioil Marine Company Limited), which allows PRM to have additional vessels and ship management contracts. According to DCF valuation analysis, the target stock price of PRM is THB 12.91 per share, which is an increase of 130.00% from its current market stock price on July 25, 2022, which was THB 5.30 per share. Therefore, it has a 10% or greater upside potential. Thus, our recommendation for PRM is “BUY"