3D systems

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

10. Residual income Model

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.