The Battle For Value, 2004 FEDEX VS. UPS Members: Amy Wu Jack Chang Irene Kuo Terry Yan Andrea Liao

Timeline FedEx UPS Creates new hub at Roissy-Charles de Gaulle Airport in France B2C home-delivery service Carries U.S Postal Service packages, Acquires American Freightways Corp. Home delivery to cover 100% of the U.S. population Acquires Kinko’s, Establishes Chinese headquarters 1999 2000 2001 2002 2003 1999 2000 2001 2002 2003 UPS IPO Acquires all-cargo air service in Latin America Acquires Mail Boxes Etc. retail franchise, Begins direct flights to China Offer guaranteed next-day home delivery Contracts with Yangtze, Reduces domestic ground-delivery time

ROA UPS IPO

ROE UPS IPO

Summary UPS IPO in 1999, so the equity increased. Therefore, the ROE&ROA decreased in 1999. UPS’s performance was always better than FedEx, but FedEx was gradually entering blissful circumstance.

WACC

EVA UPS strike 為什麼不約而同在1997年,1998年上升?

MVA

Q1: MVA of two companies Because UPS entered the China market in 2001, we chose history data from 2001-2003, we used the average of those data to predict the future.

Why FedEx still invest? Why we are based on MVA? Their EVA was negative so many years. MVA is positive  g is positive  investment projects are prospective Why we are based on MVA? EVA is short-term valuation so it can’t reflect the long term return. What’s more, transportation industry needs lots of infrastructure, of which benefit would be proved in the long term.

Q2:Evaluating their future performance UPS‘s EVA & MVA was higher than the FedEx’s. Based on all the information, UPS has better performance than FedEx.

FedEx‘s growth rate is higher than the UPS’s. China is an important market. Make the FedEx much stronger. We think FedEx may have great performance in the future because of the higher growth rate.

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