intercontinental exchange -- investment analysis presentation

INTERCONTINENTAL EXCHANGEInvestment Analysis

Presented By: Group #8

Juan Pablo Blanco

Noah Deitch

Nick Guerrieri

Chris Kuba

ICE

ICE

Agenda

Relative Valuation

Intrinsic Valuation

Company Overview

Agenda | Company Overview | Intrinsic Valuation | Relative Valuation | Recommendation

Recommendation

ICE

Company Overview

Founded in 2000 in Atlanta, GA

Electronic trading platform

OTC energy markets


DCF Overview | Assumption & Estimates

GOAL: Implement a Discounted Cash Flow analysis in order to get the intrinsic value of the firm

Enterprise Value: (Share Price x Shares Outstanding) + Market Value of Debt

Equity Value Per Share: (Enterprise Value – Market Value of Debt)/Shares Outstanding

*The team used 1Q16-3Q16 to forecast 4Q16

Forecast Period 2016* - 2025

Discount Rate/WACC 6.24%

Current Price (as of 12/04/2016) $56.65

ICEAgenda | Company Overview | Intrinsic Valuation | Relative Valuation | Recommendation

Growth Rate 7.5%

Discount Rate/WACC 6.24%

Implied Enterprise Value $14,179,079,000

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

2016E 2017E 2018E 2019E 2020E 2021E 2022E 2023E 2024E 2025E

Stage #1 PV of FCFs 2016-2015

Stage #1 | PV of FCFs 2016-2025


Growth Rate 2%

Discount Rate/WACC 2%

Implied Discounted Terminal Value $24,667,289,000

Projected 2025 EBITDA $5,165,578,000

Industry Average EBITDA* 11.159x

Implied Discounted Terminal Value $31,471,344,000

Stage #2 | Implied TV

Perpetuity Method

EBITDA Multiple Method

ICE*Intercontinental Exchange FY2015 EV/EBITDA: 4.628x


Total Enterprise Value $38,846,368,000

Less Market Value of Debt ($158,492,000)

Divided by Shares Outstanding 560,000,000

Implied Equity Value Per Share $69.09

Total Enterprise Value $45,650,423,000

Less Market Value of Debt ($158,492,000)

Divided by Shares Outstanding 560,000,000

Implied Equity Value Per Share $81.24

Implied Equity Value Per Share

Perpetuity Method (2%)

EBITDA Multiple Method (11.159x)


Sensitivity Analysis Matrix


$69.09 1.0% 2.0% 3.0% 4.0%

4.0% $95.67 $113.34 $142.79

5.0% $77.78 $88.59 $104.80 $131.81

6.0% $65.12 $72.21 $82.13 $97.01

7.0% $55.72 $60.60 $67.11 $76.22

8.0% $48.47 $51.96 $56.45 $62.44

Terminal Growth Rate

Dis

cou

nt

Rat

e

$56.65

Current Price

(as of 12/04/2016)

$69.09

Implied Price

Perpetuity Method

Difference: $12.44

$81.24

Implied Price

EBITDA Multiple Method

Difference: $24.59

Current Valuation vs. Implied Intrinsic Valuation

Recommendation Based on Intrinsic Valuation: BUY


Relative Valuation Overview

Agenda | Company Overview | Intrinsic Valuation | Relative Valuation | Recommendation ICE

ICE

Relative Valuation | EBITDA Multiples

16.88

11.97

4.628

11.159

0

2

4

6

8

10

12

14

16

18

CME NDAQ ICE Industry Average

EV/EBITDA 2015

CME NDAQ ICE Industry Average


$56.65

Current Price

(as of 12/04/2016)

$52.04

Implied Price

P/E Ratio based on industry average

Difference: ($4.61)

$63.31

Implied Price

P/E Ratio based on industry leader

Difference: $6.66

Current Valuation vs. Implied Relative Valuation

Recommendation Based on Implied Relative Valuation: BUY


Final Recommendation

Final Recommendation: BUY


$56.65

$69.09

$81.24

$52.04

$63.31

30 40 50 60 70 80 90

Current Price

DCF - Perpetuity Method

DCF - EBITDA Method

Comps - P/E Industry AVG

Comps - P/E Industry Leader

Share Price Comparison

intercontinental exchange -- investment analysis presentation

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