MSc Dissertation Abstract submission
Can LVMH hold its status as a bellwether and far surpass other competitors in the same field under the influence of the pandemic?
- The Problem:
What is the change about the valuation of LVMH with the ongoing the pandemic? Is the valuation of LVMH affected by the pandemic negatively?
Expectation: The changes will happen in the expected sales of core corporation activities and delay of core projects. The valuation still has an increase but it is much slighter than previous expectation. When comparing to its competitors operating in the same several industries, for instance, Kering and Estée Lauder Companies, LVMH may suffer less. In fact, it successfully made a mergers and acquisitions deal with Tiffany&Co. at a lower final price. Also, according to the article published on the 14th April Wall Street Journal, “ Luxury Shares Soar as Louis Vuitton Shrugs Off Pandemic .” This can be attributed to the rapid production and spreading use of vaccine, leading to the fueling strong demands for luxuries and all other products from fancy brands owned by LVMH. The market has shown that LVMH has a higher growth rate per share than Kering SA and Financière Richemont SA.
- Theoretical Framework and Background Information:
First of all, I should first clarify that valuation is not a certain existing thing. Whoever makes the valuation is just building up their investment story or investment case. The key idea is that valuation always focus on the cash flow generated through expected sustainable means including the core projects and the core activities in the company operation.
Post several ways of valuation and choose one to use in the dissertation.
The mainly used methods of comparing the valuation are NPV, IRR and payback time period. However there are more quantitative methods to help decide the “valuation ”.
Introduce the free cash flow model (FCF) and discounted cash flow model(DCF) , and show the advantages and disadvantages of them. Before the conclusion state the deficiencies of the dissertation and the possible improvements.
- Design and Methods
In this dissertation, I am going to use the discounted cash flow model to calculate the valuation in my expectation.
- Work Plan:
I plan to finish the first draft in six weeks and have no less than two weeks for modification.
Since the final month is across the May, I decide to start my main plan from June.
1 week: Data collection
1 week:Considerable Literature Review
Read a great amount of related literature
1 week: Research design and conduct the model
1 week: Main body writing
1 week:Instruction and Conclusion
1 week: Flexible time horizon in case any unexpected emergency happens
2 weeks or more: modify the draft and apply suggestions from tutor