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Final vision

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Hodge Chan

This document discusses industry and valuation analyses of 3D printing companies Exone and 3D Systems. It includes sections on: industry analyses of each company; a free cash flow valuation model; a residual income valuation model; and an investment decision based on the analyses. The industry analyses examine factors like supplier/buyer power and competition. The free cash flow model outlines advantages/disadvantages. The residual income model is selected as most appropriate given characteristics of the companies. The investment decision is that share prices are undervalued and the growing industry presents opportunities.

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Introduction Topics Industry analysis-Exone Industry analysis-3D systems Free Cash Flow Valuation Model Residual Income Valuation Model Investment Decision
Industry Analysis-Exone Name: Kaijie Qiu (Colin) To become a financial analyst
Industry Analysis-Exone About Company: Start up company in USA manufacturing and selling 3D printing machines and printing products listed in 2013 early current share price $ 21 Industry analysis: Supplier Power--- Medium (a lot of suppliers) Buyer Power--- High (more choices for customers) Competition--- Medium(new technology) Threat of Substitution--- Low(high technology) Threat of New Entry--- Medium(no enough market share)
Industry Analysis-3D systems Name: Jiaxing Li (Lee) To become a financial analyst
Industry Analysis-3D systems Company a growth company provides 3D printers, print materials, professional and consumer custom-parts services, 3D imaging and customization software initially listed on NASDAQ (TDSC) and transferred to the New York Stock Exchange (DDD) in May 2011. Current share price - $41.55 Five forces analysis bargaining power of suppliers - medium bargaining power of buyers - relatively low threat of substitutes- low Threat of new entrants- low Competitive rivalry- medium
Free Cash Flow Model Runnan Lin (Linus) Aiming to become a financial analyst
Free Cash Flow Model Cost of equity - Risk free rate from 30 years bond - Market index return from SP 500 - Beta from annual report Advantage (1) Cash flows are not affected by accounting rules; (2)It is an easy concept with familiar PV techniques Disadvantage (1) Free cash flows do not measure value added in the short run, value gained is not matched with value given up (2) This model fails to recognize value generated that does not involve cash flows; (3) Investment is treated as a loss of investment (4) Typically long forecasts horizons are required to recognize cash inflows from investments, particularly when investments are growing.
Residual income Model Name: Haoqing Chen (Hodge) To become a financial analyst in the future
Residual income Model Method considered: Residual income Reasons: Based on the unique characteristics of both companies No dividend paid out-> Not appropriate to use the Discount Dividend Model Inconsistency of cash flows-> Not accurate when using the Discounted Cash Flow method =>Residual income=primary method
Residual income Model
Investment Decision Valuation methods indicate an under-valued share price The material additive manufacturing industry is growing at 16% on the next few year ExOne is a real leader in innovation and development of advanced metals printing. 3D systems company is a leading provider of printing machine.
Final vision

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Final vision

  • 1. Introduction Topics Industry analysis-Exone Industry analysis-3D systems Free Cash Flow Valuation Model Residual Income Valuation Model Investment Decision
  • 2. Industry Analysis-Exone Name: Kaijie Qiu (Colin) To become a financial analyst
  • 3. Industry Analysis-Exone About Company: Start up company in USA manufacturing and selling 3D printing machines and printing products listed in 2013 early current share price $ 21 Industry analysis: Supplier Power--- Medium (a lot of suppliers) Buyer Power--- High (more choices for customers) Competition--- Medium(new technology) Threat of Substitution--- Low(high technology) Threat of New Entry--- Medium(no enough market share)
  • 4. Industry Analysis-3D systems Name: Jiaxing Li (Lee) To become a financial analyst
  • 5. Industry Analysis-3D systems Company a growth company provides 3D printers, print materials, professional and consumer custom-parts services, 3D imaging and customization software initially listed on NASDAQ (TDSC) and transferred to the New York Stock Exchange (DDD) in May 2011. Current share price - $41.55 Five forces analysis bargaining power of suppliers - medium bargaining power of buyers - relatively low threat of substitutes- low Threat of new entrants- low Competitive rivalry- medium
  • 6. Free Cash Flow Model Runnan Lin (Linus) Aiming to become a financial analyst
  • 7. Free Cash Flow Model Cost of equity - Risk free rate from 30 years bond - Market index return from SP 500 - Beta from annual report Advantage (1) Cash flows are not affected by accounting rules; (2)It is an easy concept with familiar PV techniques Disadvantage (1) Free cash flows do not measure value added in the short run, value gained is not matched with value given up (2) This model fails to recognize value generated that does not involve cash flows; (3) Investment is treated as a loss of investment (4) Typically long forecasts horizons are required to recognize cash inflows from investments, particularly when investments are growing.
  • 8. Residual income Model Name: Haoqing Chen (Hodge) To become a financial analyst in the future
  • 9. Residual income Model Method considered: Residual income Reasons: Based on the unique characteristics of both companies No dividend paid out-> Not appropriate to use the Discount Dividend Model Inconsistency of cash flows-> Not accurate when using the Discounted Cash Flow method =>Residual income=primary method
  • 11. Investment Decision Valuation methods indicate an under-valued share price The material additive manufacturing industry is growing at 16% on the next few year ExOne is a real leader in innovation and development of advanced metals printing. 3D systems company is a leading provider of printing machine.