BFC3241 S1, 2020
Equity Research Report Assignment
Due Date : 4pm Friday 5.6.20 (week 11)
Research Report代写 Students are organised into groups within each tutorial, and will write an equity research report covering WOW and a related company COL.
TASK DESCRIPTION:
Students are organised into groups (typically two, but not exceeding three students) within each tutorial, and will write an equity research report covering WOW and a related company COL.Research Report代写
The report involves comparing the firms’ performance and prospects, and valuation and recommendation of their common stocks using the relative valuation model.Research Report代写
The report should be concise (10 A4 single spaced page long, Times New Roman size 10) and follow the format of a professional analyst report. The appendices may contain more detailed analysis, including reasons behind the analysis in the main report, and must show all the calculations used in the report. Markers will ignore the appendices unless they need to look for assumptions or support for data reported in the main report. The absence of such support in the appendices will count against the mark.Research Report代写
The report should include all the essential parts of an equity research report recommended by the CFA Institute. Detailed tasks are listed below.Research Report代写
TASK DETAILS:
A.Team formation
Deadline: Week 6 Tutorial
Maximum three people per group. Of course, we will be more strict grading a group of 3 members compared to a group 2 members.Research Report代写
B.Selection of stocks:
– Only WOW stock (MAIN) will be analysed and valued, the other COL serves as industry peer. The peer has relevant information for 2019-2020 since before was part of Wesfarmers Limited.
– It is strongly recommended that you work with the latest financial reports which are available in Moodle.
C.Report format:
Students should use various sources of information (see lectures 5 to 9) to collect data and perform the retrospective and prospective analysis on the MAIN firm (WOW), with the remaining firm being the peer for comparison.Research Report代写
The report should cover the essential parts as suggested by the CFA Institute in the url below
http://www.cfainstitute.org/community/challenge/Documents/rc_equity_research_report_essentials.pdf
The following url has the library of past Global CFA Challenge winning reports, which contains the essential parts of an equity research report recommended by the CFA Institute:
https://www.cfainstitute.org/en/societies/challenge/past-champions
The key headings in the winning report can be used as guidance for your own report in terms of presentation and formatting. Note that you are not expected to put in the same amount of hours to produce a report comparable to a winning report in terms of comprehensiveness (refer to section D of this document for work load expectation).Research Report代写
The salient features of the report are as follows:
First Page:
The first page contains all the key information in the report. It can be thought as the executive summary, which is supported by the remaining report and the appendices.Research Report代写
The following information should be included on the first page:
– Name of students in your group
– Date of the analysis
– Firm name
– Exchange
– Ticker
– Industry
– Current stock price
– Your main recommendation (Buy / Sell / Hold)
– Target price
– Recent News: Selected important information critical for investors to have a quick overview of the firm
– Some fundamental information (key ratios and selected items on the financial statements) in the historical 1-3 years and forecast for the next 5 years
– A graph of recent price performance (including the MAIN FIRM, PEER, and the market index (ASX200 for the Australian market)
– Beta estimated from 3 years’ historical monthly stock price, risk-free rate and market return.
– Highlights: key merits and risks that support your recommendation (i.e. reasons to recommend buy/sell / hold this stock). This is the main ‘story’ of your report.
Business Description
Brief description of the firm, core businesses (key products / services, % contribution to revenues).Research Report代写
Description of business model, e.g. how the firm makes profit, where are the main sources of revenues and costs.
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Industry Overview and Competitive Positioning
Overview of the market, market shares of key players and your firm, recent trends in the past three years.Research Report代写
Analysis of Industry Competitiveness using Porter’s Five Forces.
The competitive strategies of your firm (Porter’s competitive strategies, competitive strategies – either Cost Leadership or Differentiation), the market positioning of your firm and the key players along this dimension (i.e. either cost leadership or differentiation).Research Report代写
You may include the comparison with the peer (COL) here.
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Investment Summary
State your recommendation here (Buy / Hold / Sell, target price). E.g. “We issue a Buy recommendation on stock X with a target price of Y on the basis of the relative valuation models using [P/E, P/B, P/CF, P/Sales].”
Back up your recommendation with key rationales: merits (plus points) and concerns (minus points). You need to make sure the recommendation and the rationales are consistent.Research Report代写
Financial Analysis
Tabulate the important financial ratios (grouped in categories, e.g. profitability, liquidity, efficiency, leverage etc…) using the historical financials for the last 3 years and forecast for the next 5 years. The assumptions and detailed forecast should be reported in an appendix.Research Report代写
Valuation
At least two valuation methods must be used. Note that in this assignment, you are only required to use the relative valuation approach. Several multiples can be used, eg. Price-to-Earnings (P/E), Price-to-Book value of equity (P/B) and Price-to-Sales (P/S) and Price-to-Free Cash Flow to Equity (P/FCFE). You can be creative here, e.g. know the key variable(s) in an industry (for example, hits on a web page for some internet firms), then can compare (price/hits ratio). You may also want to report sensitivity analysis of your valuation models by changing certain key assumptions.Research Report代写
Other issues (optional)
Any salient issue affecting your recommendation not covered elsewhere (and not in PEST or SWOT analysis – see Investment Risks)Research Report代写
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Investment Risks
Summarising the key risks from PEST and SWOT analysis
PEST = Political, Economic, Social, Technological
SWOT = Strength, Weaknesses, Opportunities, Threats
Disclosures:
Ownership and disclosure of material conflicts of interest:
Receipt of compensation:
Position as an officer or director:
Market making:
Any other disclaimer:
Appendices:
Appendices need to include all information / calculations needed to support the main report and may include the following items:
– Glossary
– Organisational structure / Corporate Governance
– Detailed Porter’s five forces analysis
– Financial analysis: 3 year’s historical Balance Sheet and Income Statement, and projection for the next 5 years.
o Key base case assumptions
– Comparison of key historical financial and valuation ratios with the two peers
– Detailed PEST and SWOT analysis
– Detailed method and calculation of all your valuation models
D. Mapping of the assessment task and learning and teaching activities
Writing an equity research report is a huge task even for professional investment analysts. The requirements of this assignment have been adjusted to suit the time frame and level of students in BFC3241. For example, you are expected to use the relative valuation method only. You are expected to spend about 30 hours per student on this report.Research Report代写
To help you plan your work to write the final report, below is the mapping of key areas in the report with our weekly teaching and learning activities.
Retrospective analysis
a. Introduce the firm, business model, perform strategy analysis (PEST, industry analysis etc…), and the firm’s competitive strategies (differentiation / cost leadership) (see lecture 5)Research Report代写
b. Present three years’ key financials in all key areas (profitability, investment management, liquidity, leverage (see lecture 6)
c. Perform financial analysis of the companies and compare their performance (see lecture 6).
d. Assess the firms’ stock market performance over the last three years (stock return versus market index return). Use historical monthly stock market data to estimate and report the firms’ betas using the CAPM model (see lecture 4).
Prospective analysis
a. Using the simple forecasting model in lecture 7, prepare forecasts of the condensedfinancial statements (balance sheet, income statement and cash flow statement) for the next 5 years for the firm being analysed (see lecture 7). Report sustainable growth rate at the end of the five year forecast horizon (see lecture 8).Research Report代写
b. Valuation: Calculating and analysing the valuation multiples, e.g. Price-to-Earnings (P/E), Price-to-Book value of equity (P/B) and Price-to-Sales (P/S) and Price-to-Free Cash Flow to Equity (P/FCFE), of the MAIN firm and the PEER firm for the last years (see lecture 8).
c. Valuation: Find the comparable valueof the valuation multiples in part 2.b, multiply with the one-year-ahead per-share forecasts of, e.g. earnings, book value of equity, and FCFE, of the MAIN firm to come up with its valuation. The output would be a range of valuation for the MAIN stock based on the corresponding valuation multiples (see lecture 8).Research Report代写
d. Recommendation: Based on the range of intrinsic value and the current stock price, make recommendations on the stock on the scale of Buy– Hold – Sell, and the target price (see lecture 8).
E. Submission details:
Written Report: 4pm Friday week 11
The written report will be submitted online via a link in section Assignments and Exams on Moodle. Only one student from each group should submit the assignment online. The link for soft copy submission will be available prior to the submission deadline.Research Report代写
Following teaching and learning best practices and training future analysts to avoid plagiarism, TurnItIn will be used to report text matching. You will be able to resubmit your assignment as often as you wish until the assignment due date. You will be able to see the TurnItIn text matching report showing the percentage of your work being matched with other sources, including the work of other students in the cohort, past and present students at Monash, and online materials. You need to keep the matching percentage in TurnItIn report to be minimal. A high matching percentage will result in the penalty on the final mark of the report.Research Report代写
Note that of the two matched assignments, the one submitted earlier will have a low matching percentage. However, if your work shows up as being matched with another assignment, you will be equally penalised.
Finally, when the traffic is bad, it may take a while for TurnItIn to generate the matching report. Hence, if you would like to monitor the matching percentage in the Turnitin report, you may want to submit the final report early (e.g. one day prior to the actual deadline) to allow sufficient time for Moodle to generate the Turnitin report.Research Report代写
In order to protect your privacy, please ensure none of your personal details (Name, Student ID, address, etc) are in the header, footer or body text of the assignment.
(continued on next page)
F. Mark breakdown:
| Business Description | 5 |
| Industry Overview and Competitive Positioning | 15 |
| Investment Risk | 10 |
| Financial Analysis (Historical) | 20 |
| Forecasting (Forward Looking) | 20 |
| Valuation and Recommendation | 20 |
| Written Report Style | 10 |
| TOTAL | 100 |
GOOD LUCK!
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