Proposal of paper # adidas

Suggestions and proposed roadmap for Valuation dissertations

a. Highlights from the valuation topic made available to students:

 The valuation is at year-end 2021 and the reference market price is the closing price of the last trading day of June 2021

 More than the concrete recommendation (Buy or Sell) what matters is the quality / consistency of the report

 Only the report will be accessed and not excel files (this is also written in the description of the valuation topic). That is: the report must be self-contained.

b. Advice on data sources:

 Main: company investor relations web link for financial statements, investor presentations

and eventual additional information

 Webpages of comparable companies

 News in Bloomberg about the company and comparable companies

 Bloomberg: to compute multiples of comparable companies

c. Advice on valuations methods:

 Free Cash Flow (FCF) model with the detail the student thinks is necessary. Students may

eventually start from simple models developed in Valuation related modules and add the detail judged to be necessary. Students can also use modelling skills developed in the Financial Modelling course. Important to highlight that there is no template for the model

 Multiples to complement FCF. The choice of comparable companies is made by the student. Use data from Bloomberg to compute multiples of comparable companies.

 Eventually, if it makes sense, use real-options. But emphasize that FCF and multiples are the core methodologies

d. Advice on thesis structure: students are free to decide about the thesis structure. No template

is provided. Only a proposed structure is made available in the Dissertation Guidelines document.

e. Work plan

 1st meeting at the end of March: discuss topics above described

 2nd meeting between 7th of June – 18th of June 2021. At this stage, students are expected to have a clear idea of the company, the model and the data

 3rd meeting between 5th of July – 23rd of July 2021. Follow-up on work. At this stage, students are expected to have 80% of the work done. The valuation model should be closed as well as the investment recommendation (the closing price is end of June because of this). A substantial part of the wording should also be done.

 4th meeting at the beginning of August. Pending on what the student has done, the more complete the better. Highlight that the submission deadline is 23rd of August 2021 at 23:55.

Next page: more detailed description of the topic.

VALUATION PROJECT Students are expected to produce an investment recommendation report about a listed company.

In this report students expose their investment case about the selected company, supported in their

valuation analysis. The investment recommendation can be to BUY (if valuation higher than market

price) or to SELL (if valuation lower than market price) the selected company. The consistency and

quality of the investment case and the supporting valuation exercise, both properly explained, are the

topics to be evaluated. The investment report is self-contained, i.e. there are no additional elements

to be evaluated.

Specifically, the report should deliver: 1. a discounted cash flow (DCF) valuation of the stock (common equity) in the company by

 identifying the key assumptions for the DCF analysis

 presenting relevant cash flow tables and applied valuation formulas

 estimating how sensitive the value estimates are to changes in the key assumptions

2. a relative valuation of the stock (common equity) in the company by  preparing a list of comparable (peer) companies, using criteria that are justified to be

appropriate

 choosing multiples that will be used in comparing companies across the peer group

 evaluating the company against its peers using the chosen multiples

3. a final value estimate and investment recommendation by  considering the values obtained from discounted cash flow and relative valuation

 making a final investment recommendation on whether to buy or sell the stock of the company

 The reference date for the valuation exercise is year-end 2021. The reference market price is the closing price of the last trading day of June 2021