Let’s see how three financial advisors, including Goldman Sachs, JPMorgan Chase, and LAZARD, conduct valuations? 1) Let’s look at the comparable company law first: JPMorgan Chase – concluded between $42 and $58.75; LAZARD – concluded between $43.03 and $55.69; Goldman Sachs – con

2025/06/2706:39:36 finance 1473

See how the three financial advisors, including Goldman Sachs, , JPMorgan Chase , LAZARD, etc., conduct valuations?

1) Let’s look at the comparable company method first:

JP Morgan Chase - concluded between $42 and $58.75;

LAZARD - concluded between $43.03 and $55.69;

Goldman Sachs - concluded between $54.25 and $61.32.

Let’s take the median interval among the three companies to see the calculation process of JPMorgan Chase.

The first step is to select comparable companies - in terms of comparable companies, JPMorgan selected 6 targets, namely Altria Group (Philip Morris US business), British American Tobacco, British American Tobacco (excluding RAI caliber), Empire Tobacco, Japanese Tobacco , Philip Morris International (Philip Morris International Business), and Swedish Match AB.

Step 2, Statistics - JPMorgan Chase counted the third step of FV, FV/EBITDA, and PE

based on the closing price on January 13, 2017, and selected range - Among the selected companies, the FV/EBITDA (dynamic) multiples are 10.1X to 13.5X, the average is 11.9X, and the median is 12.0X; the dynamic price-to-earnings ratio in 2017 was 13.0X to 20.3X, the average is 17.2X, and the median is 17.3X.

Based on the above analysis results and JPMorgan Chase’s professional judgment, JPMorgan Chase has launched multiple reference ranges:

FV/EBITDA: 10.0X to 13.5X, and the stock price is derived from the range of $36.5 to $51.75.

PE: 13.0X to 20.X, deduced that the stock price is between $32.5 and $51.25.

Step 4, adjust the premium - but considering the particularity of this merger and acquisition transaction

Therefore, based on the above valuation conclusion, JPMorgan Chase then used the selected transaction method to adjust it. The statistical sample is the statistical sample of merger and acquisition transactions in the tobacco industry between 2001 and 2015, the FV/EBITDA (LTM) multiple is 7.4X to 16.0X, the average is 12.5X, and the median is 13.0X. After the adjustment, it is derived that the stock price is between US$42 and US$58.75

2) and then look at the DCF model:

RAI, BAT, Goldman Sachs, JPMorgan Chase and Lazard jointly issued RAI profit forecasts, the data are as follows

0 Key assumptions are as follows:

1) The US economic environment is stable;

2) The decline in cigarette production rate maintains the historical average speed;

3) inflation cost is 3%;

4) The price rise of cigarettes continues;

5) Some new brands have moderate growth;

6) The regulatory environment is stable;

7) Capital expenditure is close to the 2016 level from 2017 to 2021.

Perpetual growth rate: Goldman Sachs - 0.5%; JPMorgan Chase - 1%; LAZARD - 0.5%.

WACCh: Goldman Sachs - 6.5%; JPMorgan Chase - 5.75% to 6.75%; LAZARD - 5.5% to 6.5%. The specific calculation process of

has not been disclosed by the three intermediary agencies. The results of the final DCF model are as follows:

Goldman Sachs - $45.16 to $72.17;

JPMorgan Chase - $47.5 to $68.75;

LAZARD - $50.05 to $73.38. The final transaction value of

is US$56.5, which is the median of the DCF model range and is comparable to the high of the company method. The value of RAI's overall equity is US$93 billion.

So, is this valuation expensive or cheap?