Description
FINM1415: Introduction to Finance
Semester 2, 2024
Individual Stock Valuation Report
(20% of Total Grade)
Due Date: 4th October 2024, 14:00 (Brisbane Time).
The individual report has two parts. Part A is a stock valuation report; Part B is a self-reflection report.
Objective: This assignment aims to get you to experience analysis on a stock. You are asked to conduct a stock evaluation using various financial models and recommend an investment to a client. You also need to draw from your learning journey/experiences to complete a self-reflection report.
Part A: Stock Valuation Report
Deliverable: The stock valuation report should have a maximum of 5 pages (excluding cover sheet, spreadsheets, reference list, and appendix, and excluding the self-reflection report). You should include all critical information in these five pages; your clients should not need to go through either the excel spreadsheet or appendix to acquire necessary information.
You have the freedom to create the report in any style that you like. However, the report should be presented professionally.
Preparation:
You have the flexibility to select a company (other than your assigned company for Week 6 presentation) which is in the same industry that you have presented in your team presentation.
Please select your company in your tutorial, and if you wish to change a company you must email your tutor. Note that all companies are to be different across your group members. Please refer to the excel files (ie “FINM1415 Assessment – List of Companies” and “ASX200 List of Companies” on Blackboard for more information.
Where to source the data?
Capital IQ provides a wealth of financial data about listed companies with an array of tools for analysis, ideation, and efficiency. Please sign up for a login using your @student.uq.edu. au email address at https://www.capitaliq.com/ciqdotnet/login.aspx. Click on New User to register.
• DatAnalysis Premium provides access to Australian and New Zealand listed company information. You can access this through the UQ library:
http://datanalysis.morningstar.com.au.ezproxy.library.uq.edu.au/
There is a FINM1415 Database.pdf file to help you use the databases on Blackboard. Any further questions please ask your tutor.
Start of the Question
Assume “today” refers to the latest financial year results. For companies full year ended in December use the financial year 2023. Note for the companies full year ended in June, many will have reported financial year 2024, or will do shortly. No matter what the company, use the latest actual financial year results as “today.”
Part 1: Fundamental Analysis (65 marks)
1. Include a short introduction about the company. (5 marks)
2. Carry out valuation using the Dividend Discount Model (DDM). Your analysis should address:
(a) The estimation on equity cost of capital. (5 marks)
(b) The estimation of growth rate clearly states how you measure growth rate. For example, what
variable would you use to estimate the growth rate? What is the time horizon of your choice?
What other qualitative factors may affect your estimation? (15 marks)
(c) Use inputs you specified in part (a) and part (b) to carry out a DDM valuation. What
recommendation would you make about investing in this stock? (10 marks)
3. Provide an assessment of the company using at least 3 value multiples. Interpret the multiples
and discuss the company’s relative position in the industry. What recommendation would you
make about investing in this stock today? (15 marks)
4. Compare your recommendation between using DDM and value multiples, do they give you the
same recommendation, why? If not, why would they differ from each other, and which valuation
approach would you recommend for your company? (5 marks)
5. Assume that the most recent announcement of the company indicates that they will increase
the dividend payout ratio by 10%. Discuss how would this affect your recommendation on this stock. (10 marks)
Other assumptions that you may need:
• Assume the risk-free rate is 4.0%.
• Market portfolio return is 8.5%.
Part 2: SEAL Reflection – Situation, Effect, Action and Learning (30 marks)
Self-reflection is the best way to develop your understanding of your own practice for future improvement. The SEAL reflection method is a structure that guides you to think about your journey in four aspects: Situation, Effect, Action and Learning.
As part of your journey in this course, we ask you to put down some notes by writing 1-2
sentences or a couple of keywords to reflect the challenges you have encountered. Now, upon
completing your individual report, use these notes as your benchmark to evaluate your journey.
Firstly, take some time to appreciate how much you have achieved, and then lets unfold those
challenges and think about what you have learned. If you have not yet identified any challenges
with the tasks so far, there should also be a moment that you consider yourself come to a deeper
realization and understanding of the task.
Your reflection needs to be critical. You need to move beyond merely describing your learning experience but to highlight, explain and analyze the changes in your understandings and approaches resulting from the experience.
You may wish to discuss various aspects that reside with your personal experience:
• What you have learned about applying textbook knowledge to real-world situations. What are the challenges of dealing with real-world analysis? Is there anything particular to the company of your evaluation that you find challenging to address?
• What you have learned about working collaboratively in a team. How effective is your team communication, and what would that look like if you worked in a firm. And how did you manage to
keep the productivity going despite your role in the team? Have you discovered your strength of working in a team?
• The implications of what you have learned for your future professional practice – how would you
develop your professional capabilities, and how would you work on the areas you need further
development?
To receive a high quality AI and plagiarism free solution to this task, please contact us through WhatsApp +254716353533.
