Your analyst team (comprising 3-5 students ) must advise a well-diversified high net-worth individual who is interested in investing in shares with a fundamental value greater than the share price. As financial analysts, you are required to write a detailed recommendation report on whether to invest in the selected company.Your report shall be divided in 5 Sections (preceded by a brief executive summary) to address the following questions of your client. The report is not necessarily in exactly the same order as suggested below. Rather, it is important to consider the flow of the content for you to decide the appropriate order.
1. What are the competitive forces behind the industry’s structure? How does competition affect the margins of the industry and the company? How does the company’s profitability compare relatively to its peers (select between 3 and 5 Australian or overseas peers)? What is the firm’s business strategy? Please highlight potential investment risks (factors) the company could face in the future (please refer to Lectures 2 and 3);
2. Analyse how the market is pricing the firm using different relative (or market) valuation techniques. The same group of industry peers identified in the previous section MUST be used; you are also allowed to include other peers based on different selection criteria to achieve more robust valuation. (please refer to Lectures 4 and 5);
3. Estimate carefully the cost of debt, cost of equity and cost of capital for this company (please refer to Lectures 6 and 7);
4. Estimate the free cash flows of the company (please refer to Lectures 8 to 10).
5. Estimate the target price of the company, issue a buy/hold/sell recommendation to your.
Your report is expected to be submitted by 11:59pm Friday 29 October 2021 (please refer to the ilearn instruction and unit guide for more information about late submissions ). Your submission should contain all of the following:
(i) A 7 to 10 page recommendation report (in font Times New Roman – font size 11) in Word or PDF, discussing the scope of the work, your justified assumptions, findings and recommen-dation. Please refer to examples of analyst reports (available on iLearn) when formatting your team report;
client, and draw your conclusion.
(ii) A cover page indicating:
(a) your team number; and
(b) members’ name, student number, email address; 3) each member's contribution % (refer to lecture 1). Please also identify the team leader for email correspondence.
(iii) Cover page is not included in the page count, and you are welcome to list neccessary supportive statistics or work in Appendices though they wont be marked.
(iv) A spreadsheet model (in Excel), showing all your numerical assumptions, steps of estimation, and company’s valuation. The team leader ONLY should submit the equity report to the submission link that will be activat- ed on iLearn. The team leader should also submit the Excel file containing all the calculations in a separate link that will also be available on iLearn. Please name both files using your team number (e.g., Group 5.pdf). You will know your group number by self-enrolling in a group in iLearn with your group members.
Team leader is also responsible for submitting a meeting log in order to receive the extra 1 mark. The meeting log should specify the date and time of each meeting, briefly describe each meeting's coverage and each member's participation of discussion in each meeting. The meeting log should be kept within 2 pages and signed by all members.
