Question
As a financial analyst you have been asked to analyse an ASX listed company. The company is one of your choosing. Your task is to
As a financial analyst you have been asked to analyse an ASX listed company. The company is one of your choosing. Your task is to make a recommendation as to whether this company is an attractive investment opportunity. Before you draw a conclusion, you are required to:
1) Discuss how successful the company has been at maximizing stakeholders value over a set analysis period. This period may be 12 months, 2 years, or 5 years.
2) Analyse the company's share price history and traded volumes over the chosen analysis period.
3) Calculate the return for investing in the company both short term and long term and identify the main causes of its volatility in return over the corresponding holding period. The discussion of volatility should consider economic-wide and firm-specific factors.
4) Apply the valuation technique(s) taught in this course and undertake a current valuation of the equity for your company. Based on your calculation, would you recommend a prospective investor to buy, hold or sell this security and why?
5) Analyse the company's dividend policy. Should the company follow a progressive dividend policy? Critically evaluate factors that are affecting corporate dividend policy and how your company's dividend policy may have influenced its capital structure and share price.
6) Analyse the company's capital structure. How would you describe the current capital structure for your company and justify with reasons that should potential investors view this company as a favourable investment choice? Based on the attempt to all of above questions conclude whether your company is an attractive investment opportunity. You should clearly explain your assumptions used in the valuations and estimations and critical discuss the limitations of your analysis and any other risks that may affect investors' decision making.
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