Value the Share of a Public Listed Company Report - Accounting & Finance Assignment Help

Assignment Task

Task 

Task:  You are required to value the share of a public-listed company to be assigned to you.

Details: 
Assessment Task 2 requires students in groups  to prepare a report.  Students are expected to present this assignment as a business report, that is, it must include an executive summary, a table of contents, introduction, the body of the report and a conclusion. The report must be of a standard commonly expected in the commercial world in relation to grammatical correctness, fluency and style. Students are required to reference their report according to the Harvard system.  Students must demonstrate an understanding of the subject material.
 

Components of the Report
1. Introduction 
• Company background – Summary of the main operating activities of the company including identification of any major changes during the last 5 years.
• Industry overview and key issues.
• Economic outlook for the company.

Profitability 
Analyse the trend of the company’s profitability over the last 5 years and identify the causes of any major changes. Your analysis should be illustrated by simple line graphs of factors such as: annual sales and net profit amounts, annual growth rates of sales and net profit, profit/sales, profit/assets, profit/shareholders’ funds, earnings per share.

Dividend forecasting 
Explain with reasons whether or not you believe the company’s  dividends are likely to have a constant growth rate or variable growth rates. Estimate the growth rate (s) for the future dividends.  

Share valuation by using DDM 
Estimate the intrinsic value of the company’s shares using  the Dividend Discount Model.
Step 1: Obtain an estimate of a risk-free rate.
Step 2: Calculate the return on the local stock market – by computing the average return of a Stock market Index, such as the All Ordinaries Index or ASX 200 over a 60-month period, and then consider what the appropriate market risk premium should be (are there alternative sources of estimate for this purpose?).
Step 3: Obtain an estimate of the beta of the stock by using linear regression (stock returns over market returns). 
Step 4: Apply the CAPM formula to compute the discount rate.
Step 5: Apply the DDM (constant growth or variable growth) to estimate the value of the stock.

Share valuation by using P/E ratio 
 Estimate the fundamental value of the stock by using the P/E ratio and justify your valuation. 

Share investment 
Consider the pros and cons of your valuation approaches above. Use your findings to indicate with reasons whether you would recommend the company’s ordinary shares as an investment for a superannuation fund.

References 
The assignment is to be referenced using Harvard style referencing (author-date). The report should use a font / font suitable for business communication.

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