Kempen Research Valuation methodology

Kempen Research uses a variety of valuation methodologies to reach our Price Targets that include residual value, DCF, dividend discount and other. We encourage investors that would like to discuss the individual stock method with your Sales contact at Kempen Securities. For reference we show the key methodologies used per covered niche:

Life Sciences

We estimate a 12-month forward fair value for all of our companies under coverage using a discounted cash flow methodology (DCF) approach (10 year projections and terminal value) or sum-of-the-parts (SOTP) DCF approach. We use set WACC values in accordance with the risk profile of the investment case.

Local Alpha

We estimate a 12-month forward fair value for our companies under coverage using DCF, peer multiples and historical valuation multiples. Some companies are active in different businesses for which we use a sum-of-the-parts (SOTP) approach. 

Infrastructure

We estimate a 12-month forward fair value for our companies under coverage using the discounted cash flow methodology (DCF; 10 year projections + TV or actual duration for concessions) and multiples approach. We compute the Cost of Equity using the Capital Asset Pricing Model (CAPM). For companies active in different businesses (concessions/contracting), we use a Sum-of-the-parts (SOTP) approach to capture the different duration and discount rates. For the REIFs, we value the current portfolio and the value creation from acquisitions over a five year period using the spread earned over the cost of capital. 

Real Estate

We estimate a 12-month forward fair value for all of our companies under coverage using a residual value methodology. We assess the returns to shareholders (RoE) over the hurdle rate (Cost of Equity) on a five-year forecast horizon in relation to its last reported Kempen adjusted Net Tangible Asset (NTA), which adjusts IFRS NAV for, among others, deferred taxes, derivatives, intangibles and goodwill. For a small number of companies we additionally assess a discounted value of future development gains or land appreciation or a Sum-of-the-parts (SOTP) analysis. 

For more details, please see www.research.kempen.com