Impact of COVID-19 on a Non-Financial Institution Listed on SGX

Question 1

With gradually more people receiving vaccination, the world economy is opening up once again. Coupled with huge stimulus packages from governments, especially the United States, the world economy has started to rebound. However, resurgence of the COVID-19 virus has caused some countries to reintroduce tighter measures, and these threaten to derail economic growth. Choose any non-financial institution listed on the Singapore Stock Exchange (SGX) and analyse to show the impact of the above scenario for the sector that your chosen company belongs to.(10 marks)

Question 2

Determine the company’s cost of capital by considering separately the cost of equity and the cost of debt and calculate the weighted average cost of capital that can be used to discount the free cash flows of the company. (10 marks)

Question 3

(a) Qualitatively discuss the likely impact of the scenario in Question 1 on the fundamentals of your chosen company (i.e. financial statement items and valuation indicators)

(b) Value the shares of the company using a discounted free cash flow model and the weighted average cost of capital calculated above

(c) Compare using relative valuation methods your chosen company with least two (2) comparable companies, which may or may not be listed on the SGX.