Scribd
Upload
147 views

Case 5 Tom - Com Guidelines

This document provides the details for Case Report 5 which is an analysis of the valuation of Tom.Com, an Asian internet company. Students are asked to prepare a report of no more than 3 pages addressing: 1) An assessment of Tom.Com's business model, revenue model, potential risks, and major shareholders. 2) A comparison of how internet stocks are valued versus traditional firms. 3) An analysis of 3 methods (implied growth, discounted cash flow, relative valuation) to estimate Tom.Com's value and a recommendation regarding EuroGlobal's potential purchase of Tom.Com shares.

Uploaded by

jamn1979
Copyright
© © All Rights Reserved
Available Formats
Download as DOC, PDF, TXT or read online on Scribd
147 views

Case 5 Tom - Com Guidelines

This document provides the details for Case Report 5 which is an analysis of the valuation of Tom.Com, an Asian internet company. Students are asked to prepare a report of no more than 3 pages addressing: 1) An assessment of Tom.Com's business model, revenue model, potential risks, and major shareholders. 2) A comparison of how internet stocks are valued versus traditional firms. 3) An analysis of 3 methods (implied growth, discounted cash flow, relative valuation) to estimate Tom.Com's value and a recommendation regarding EuroGlobal's potential purchase of Tom.Com shares.

Uploaded by

jamn1979
Copyright
© © All Rights Reserved
Available Formats
Download as DOC, PDF, TXT or read online on Scribd
You are on page 1/ 2

BUS 433a: Company Valuation and Value Creation

Spring 2013, AUBG


Cases and Case Reports

Case report 5: Tom.Com: Valuation of an Asian Internet Company Case - 25 points;


Due Monday, April 15, 2013
Prepare an analysis of the Tom.Com case. Present your findings in a report to Andy Lau not
to exceed three single-spaced typed page, plus relevant exhibits. The report should not be
in question and answer format, but it should address the following questions. Include a brief
introduction, analysis, and summary/conclusion.
(a) Size up Tom.Com, Ltd. Assess Toms business model, revenue model, potential
risks, and major shareholders.
(b) Consider the valuation of Internet stocks versus traditional firms. What are the
similarities? What are the differences?
(c) Consider the following three methods for estimating the value of Tom.Com.
Clearly state and be prepared to defend any assumptions. What is Toms worth
compared to the suggested IPO price?
Data Summary:
Total shares after IPO
Risk-free rate
Market risk premium
Estimated required return for Tom
Toms 1999 revenue
Toms tax rate

2,849,000,000
6%
6%
15%-25%
$51,695,000
15%

Method 1 - Implied Average Annual Revenue Growth Rate -Use the spreadsheet to
compute this growth rate for the three scenarios. Using the Goal Seek tool in Excel, estimate
the Market Capitalization at IPO if the Implied Average Annual Growth Rate is 50%.
Method 2 - Discounted Cash Flow-Again use the spreadsheet. Consider using scenario and
sensitivity analysis.
Revenue growth 2000-2004
Revenue growth 2005-2009
Operating margin 2000-2002
Operating margin 2003-2009
Beta 2000-2004
Beta 2005
Debt/Assets 2000-2004
Debt/Assets 2005
Cost of debt 2005
Capital expenditures 2000-2002
Capital expenditures 2003
Net working capital
Terminal growth rate

80%
30%
-150% (after tax)
5% (after tax)
1.8
0.5
0
50%
9%
$200 million above depreciation
Same as depreciation
8% of revenue
5%

Method 3 - Relative Valuation Using Trading Multiples - Consider the usefulness of the
following multiples to valuing Tom.Com: Price/Earnings, Price/Sales, Price/Book.
(a) What would you recommend to Andy Lau and EuroGlobal regarding the
purchase of Tom.Com shares?
(b) Think about this issue for discussion, but do not worry about including it in your
report: (1) How would the value of Tom.Com be affected if it were to be purchased
by a U.S. company interested in repatriating free cash flows back to the U.S.?

You might also like