Cocoa Bhd is ranked approximately in the middle of the thirty listed companies in the Malaysian snack food industry. The company is one of the few home grown Malaysian consumer firms that have successfully penetrated regional markets.

Follows are the financial data for Cocoa Bhd:

PROFIT & LOSS (All figures in MYR mil unless otherwise indicated)
FY Dec	2019	2020F	2021F	2022F
Revenue	260.8	261.6	259.5	279
Operating Profit	30.6	44.8	46.6	51.6
Other Income	2.5	4.5	6.5	3.2
Share of Associates	0	0	0	0
Depreciation/Amortization	-10.8	-12.1	-11.4	-12.4
Finance Costs	0	0	0	0
Pre Tax Profit	30.6	44.8	46.6	51.6
Tax	-8.7	-12	-11.2	-12.9
Net Profit to Shareholders	21.9	32.7	35.4	38.7
Operating Margin (%)	11.8	17.1	17.9	18.5
PBT Margin (%)	11.8	17.1	17.9	18.5
Net Margin (%)	8.4	12.5	13.6	13.9
BALANCE SHEET (All figures in MYR mil unless otherwise indicated)
FY Dec	2019	2020F	2021F	2022F
Total Assets	261.6	251.1	266.2	291.7
Fixed Assets	139.1	129.6	130.2	138.2
Current Assets	122.5	121.5	136	153.5
Current Liabilities	35.7	38.5	34.9	37.1
LT Liabilities	7.6	9.9	10	10.6
Total Liabilities	43.3	48.4	45	47.7
Share Capital	85.8	114.4	114.4	114.4
Minority Interest	0	0	0	0
Owners' Equity	218.3	202.7	221.3	244
Total Equity	218.3	202.7	221.3	244
Total Liabilities & Equity	261.6	251.1	266.2	291.7

PER SHARE DATA (All figures in sen unless otherwise indicated)
FY Dec	2019	2020F	2021F	2022F
Revenue	114	114.4	113.4	121.9
Cash Flow	14.3	19.6	20.5	22.3
Earnings	9.6	14.3	15.5	16.9
ROE (%)	10	16.1	16	15.9
Total Debt/Equity (%)	19.8	23.9	20.3	19.6

OVERALL

Market Cap(Mil.):	RM459.89
Shares Outstanding(Mil.):	228.80
Dividend (sen):	0.03
Yield (%):	3.67
Treasury-bill rate (%)	3.9
Market returns (%)	6.96
WACC equivalent to RROR
Stock Price as at Jan 3rd, 2020	RM2.03

Provide below the historical prices for Cocoa Bhd and KLCI index:

	Cocoa	KLCI
Date	Closing Price (RM)	Closing Price
Dec 2018	2.01	1641.42
Jan 2019	2.1	1671.54
Feb 2019	2.15	1693.77
Mar 2019	2.46	1740.09
Apr 2019	2.67	1768.06
May 2019	2.74	1765.87
Jun 2019	3.05	1763.67
Jul 2019	3.14	1760.03
Aug 2019	2.72	1773.16
Sep 2019	2.8	1755.58
Oct 2019	2.83	1747.92
Nov 2019	2.75	1717.86
Dec 2019	2.61	1796.81

Required:

(a) Compute the standard deviation for Cocoa and KLCI Index. (14 marks)

(b) Identify the correlation coefficient between Cocoa and the KLCI Index.

(9 marks)

(c) Calculate the estimated operating free cash flows (FCFF) of Cocoa Bhd.

(15 marks)

(d) Calculate the discounted free cash flows (FCFF) and the value of Cocoa Bhd stock in early 2020. The company will grow at 2 percent constant annual growth in year 2022 onwards. Recommend your evaluation. (12 marks)

(e) Based on your analysis and evaluation of the stocks historical returns, financial data and your answers in (d), justify your recommendation. (10 marks)