Comparable Analysis

1. Truth Behind Valuation Comparable Companies Analysis of GM

2. Why we choose this topic?

5. Methodologies of Valuation Comparable companies analysis Precedent transactions analysis Discounted cash flow analysis

6. Comparable Companies Analysis Primary methodology Given focus company, division business, or collection of assets Broad range of applications, M&A situations, IPOs, restructurings, and investment decisions.

7. Comparable Companies Analysis Premise Pros and Cons

8. Comparable Companies Analysis Premise Pros and Cons

9. Premise Similar companies provide a highly reference point share key business and financial characteristics, performance drivers and risks.

10. Comparable Companies Analysis Premise Pros and Cons

11. Comparable Companies Analysis Assumptions Pros and Cons

12. Pros and Cons Pros Market-based Relativity Quick and convenient Current Cons Market-based Periods of irrational exuberance or bearishness Absence of relevant comparables Potential disconnect from cash flow Company-specific issues

13. Target??

15. Valuation Steps Step 1 -Select the universe of Comparable Companies Step 2 -Locate the necessary financial information Step 3 –Spread Key Statistics, Ratios, and Trading multiples Step 4 –Benchmark the Comparable Companies & Determine Valuation

16. Valuation Steps Step 1 -Select the universe of Comparable Companies Step 2 -Locate the necessary financial information Step 3 –Spread Key Statistics, Ratios, and Trading multiples Step 4 –Benchmark the Comparable Companies & Determine Valuation

17. Selecting …

18. Valuation Steps Step 1 -Select the universe of Comparable Companies Step 2 -Locate the necessary financial information Step 3 –Spread Key Statistics, Ratios, and Trading multiples Step 4 –Benchmark the Comparable Companies & Determine Valuation

19. Source of Data SEC filings Consensus research estimates Equity research reports Press releases Financial information services Source: http://yahoo.brand.edgar-online.com/DisplayFiling.aspx?dcn=0001193125-11-130473 http://www.moodys.com/credit-ratings/General-Motors-Corporation-Old-credit-rating-316500 http://www.standardandpoors.com/prot/ratings/entity-ratings/en/us/?entityID=1169842&sectorCode=CORP

20. Valuation Steps Step 1 -Select the universe of Comparable Companies Step 2 -Locate the necessary financial information Step 3 –Spread Key Statistics, Ratios, and Trading multiples Step 4 –Benchmark the Comparable Companies & Determine Valuation

21. Financial profile Size (sales, gross profit, EBITDA, EBIT, and net income) Profitability (gross profit, EBITDA, EBIT, and net income margins) Growth Profile (historical and estimated growth rates) Return on Investment (ROIC, ROE, ROA, and dividend yield) Credit Profile (leverage ratios, coverage ratios, and credit ratings)

22. Valuation Steps Step 1 -Select the universe of Comparable Companies Step 2 -Locate the necessary financial information Step 3 –Spread Key Statistics, Ratios, and Trading multiples Step 4 –Benchmark the Comparable Companies & Determine Valuation

23. PresentTense

24. After Deliberations…We’ve decided to Choose

25. Market Valuation Data collected from recent) 10-K and consensus report

26. LTM Financial Statistics All in millions Data collected from recent 10-K(Annual Report)

27. Sales and Cross Profit

28. Sales and Cross Profit

29. EBIDA, EBIT and Net Income

30. LTM Profitability Margins Data collected from recent 10-K(Annual Report)

31. LTM Profitability Margins

32. Growth Rates Data collected from recent 10-K(Annual Report)

33. Return on Investment Data collected from recent 10-K(Annual Report)

34. Return on Investment GM is Here! Data collected from recent 10-K(Annual Report)

35. LTM Leverage Ratio Data collected from recent 10-K(Annual Report)

36. LTM Coverage Ratios Data collected from recent 10-K(Annual Report)

37. Credit Rating

38. Determine Valuation Companies in Auto sector tend to trade on the basis of forward EV/EBITDA multiples Choose the closest comparables Implied Valuation= Multiple Range* Metric (which is EBITDA)

39. Trading Multiple

40. GM’s Implied Valuation is All in millions

41. Compared With

42. GM’s Implied Valuation is All in millions Enterprise Value From Yahoo! Finance is 25.74B

43. Conclusion ?

44. Interpretation of financials Application of Trading multiples

45. Group Members Jiali Zhang ZhiyangJia WenjiaoGu Shen Li

46. Thanks For Your Attention!