Capital Market Analysis - Industry Analysis - Report Writing Management Assignment Help

Assignment Task:

The purpose of the group project is to help you develop the skills necessary to conduct an equity anal- ysis. The project will help you appreciate the challenges involved in valuation and the complexity of the task involved. It will help you develop knowledge of a particular company and its industry. You will also understand how companies are affected by broader macro-economic factors. The project will give you hands on experience of analysing financial statements and will, thus, help you connect theory with practice. Finally, you will learn how to forecast financial statements and use them for estimating the value of equity. 

Please write your project report in a report form. You may consult sample equity reports for Woolworths by Macquarie Wealth Management and Credit Suisse to help you structure your report. The project should begin with an introduction, outlining which company you are valuing, and a brief company profile.1 The project is divided into the following parts: 

Capital Market Analysis (5 marks) 

Your analysis should cover the following points: 

1. Plot the stock price and trading volume movement (present charts) of your company over the last 5 years (if your company does not have 5 years’ data, use as much past data there is available). Please also plot the movement of a suitable market index (such as the Australian All Ordinaries – ∧AORD). Compare the price movement of your company with the market index. You should plot monthly prices and trading volume. Please describe the results. 

2. Identify at least two significant events during the last five years that might have affected the stock price of your chosen company. You will need to search the internet for this information. You could use the Factiva database available from the library for this purpose. Please describe how these events might affect the performance of your company. 

3. Calculate the monthly bid-ask spreads and trading volume over the last five years (if your company does not have 5 years’ data, use as much past data there is available) and compute the average spread and volume over the full time period. Remember to describe how you measure the bid-ask spread and trading volume. Please note that “bid” and “ask” prices are not directly available. However, the historical data available from Yahoo! Finance includes the daily (or weekly or monthly) high and low prices. The high (low) price is a reasonable proxy for the ask (bid) price. 

Industry Analysis (5 marks) 

Your analysis should cover the following points: 

1. What is the main industry that your company operates in? How big is the industry (measured in terms of number of listed companies and industry sales2)? What is the relative position of your company (in terms of sales)? 

1This information is available from Yahoo! Finance and DatAnalysis Premium. However, do not copy from these sources 2Industry sales can be measured by adding the sales of individual companies in the industry. You will need to obtain data from DatAnalysis Premium. 

2. At what rate is your market expected to grow in the next year, five years? What are the key expected growth areas? 

3. Identify the main competitors of your company. 

4. Use Porter’s Five Forces to explain the current position of the company being followed. You need to discuss the relative importance of the different forces. 

5. Identify three major risks that the company faces (other than competition) which threaten its profitability. 

6. What are the average analyst target price and recommendation for your company? What do they mean for your company’s outlook? 

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