BAFI1045-Investments

You are required to analyse a listed company and prepare an investment recommendation report. The report provides an assessment of the company’s current position and future prospects, incorporating the use of various valuation techniques to arrive at estimates of the intrinsic value of the company’s shares. Your report should make a case for the company’s shares to be rated in one of the following ways:

Sell-The shares should be sold, as a materially negative return is expected in the next six to 12 months.

Hold-The shares will have neither a materially positive return nor a materially negative return in the next six to 12 months.

Buy-The shares should be bought, as a materially positive return is expected in the next six to 12 months.

Evaluate the relative historical financial performance of the company among its peers

1.identify the firm’s competitors and discuss why they have been selected

2.identify, and explain the relevance of, five financial ratios of your choice (not to include ROE, Net Profit Margin, Total Asset Turnover or Financial Leverage) for the company and its peers

3.explain the performance of the company compared to its peers using this analysis

4.analyse and explain the reasons for changes in these ratios over the past five years

Estimate the ROE of the company for most recent five years using the DuPont ROE approach.

1.DuPont Analysis should be done using the 3-step procedure

3 steps: Net Profit Margin, Total Asset Turnover and Financial Leverage

2.analyse the company’s and your selected peer companies’ ROEs over the period

3.show your own calculations for each component over the previous five years

4.compare the DuPont ROE of the company with its industry peer group companies