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BAFI2077 Investment Analysis - Research Project and Presentation

Please download all the data and information related to this project from DatAnalysis Premium and IBISWorld

Description

You will conduct research and analyse REA Group Limited (ASX.REA) in Australia, write a research report, make a recommendation of buy, sell, or hold, and present and defend your analysis.

Section 1: Business Background

• Introduction (Business description;
• Corporate Strategy

Section 2: Company Level Analysis

Historical Financial Performance

Financial Ratio Analysis ************************

Suggestion: Du Pont analysis

SWOT Analysis

Section 3: Industry Level Analysis

Industry Overview

Key Industry Drivers

Porter's Five Force Model

Threats of New Entrants

Bargaining Power of Suppliers

Bargaining Power of Buyers

Threats of Substitutes

Rivalry among Existing Players

Peer Group Analysis

Section 4: Macroeconomic Level Analysis

Political Factors

Economic Factors

Social Factors

Technological Factors

Environmental Factors

Legal Factors

Section 5: Valuation Section ******************

This report implements three valuation models to estimate the intrinsic value of a company, which includes the Dividend Discount Model, free cash flow to equity model, and relative valuation model.

Capital Asset Pricing Model ***********

The first parameter represents the risk free rate which is represented by the yield to maturity of Australia 10 year government bond --- find your bond rate from RBA website

Discuss how you calculate beta --- (see Beta video)

represents market return, please use 0.09826 (9.826%)

Dividend Discount Model *********

Analyse historical dividends over the past 5 years (present in a table). Find out historical dividend growth rate

Then provide your forecast of growth rates and dividends. You will need to use the multi-stage DDM model.

We recommend you to use the 3-stage model, please watch the video about DDM for more info

Free Cash Flow to Equity Model. **********

Calculate historical FCFE first using the formula in the topic 4.

Calculate historical growth rate for the FCFE.

Make your assumptions of the future growth rates

Relative Valuation Model ********

Use the P/E method.

Suggestions

1. Use industry P/E multiplied by forecast EPS
2. Use peer average P/E multiplied by forecast EPS
3. Use historical P/E multiplied by forecast EPS

Valuation Summary***********

Based on the three valuation methods, summarise the outcome

Conclusion

Conclude the report and provide an overall buy/hold/sell recommendation

Also, PowerPoint slides pitchthe company, investment, and recommendationsBAFI2077 Investment Analysis - Research Project and Presentation

Please download all the data and information related to this project from DatAnalysis Premium and IBISWorld

Description

You will conduct research and analyse REA Group Limited (ASX.REA) in Australia, write a research report, make a recommendation of buy, sell, or hold, and present and defend your analysis.

The research project must:

• not be longer than 20 pages (excluding the front and back cover and the assignment cover sheet) + Appendix 10 pages = Total 30 pages report;
• be A4-sized paper (210mm x 297mm or 8.27" x 11.69");
• include the following information in a header on the first page:
• Company name
• Exchange
• Ticker symbol
• Sector
• Industry
• Recommendation (buy/sell/hold)
• Current price (as of __ date)
• Target price (% increase/decrease)
• contain only publicly available information;
• be the original work of the team members (please note the academic misconduct and plagiarism policy of RMIT University; the consequence of academic misconduct and plagiarism is outlined in the course guide);
• be prepared from the perspective of an independent research analyst;
• be submitted to the course coordinator/offering coordinator by the deadline;
• include the course code and name, team members' names and student ID, and the Company name on the front cover;
• attach RMIT cover sheet;

• must include the following methods:

Section 1: Business Background

• Introduction (Business description;
• Corporate Strategy

Section 2: Company Level Analysis

Historical Financial Performance

Financial Ratio Analysis

Suggestion: Du Pont analysis

SWOT Analysis

Section 3: Industry Level Analysis

Industry Overview

Key Industry Drivers

Porter's Five Force Model

Threats of New Entrants

Bargaining Power of Suppliers

Bargaining Power of Buyers

Threats of Substitutes

Rivalry among Existing Players

Peer Group Analysis

Section 4: Macroeconomic Level Analysis

Political Factors

Economic Factors

Social Factors

Technological Factors

Environmental Factors

Legal Factors

Section 5: Valuation Section

This report implements three valuation models to estimate the intrinsic value of a company, which includes the Dividend Discount Model, free cash flow to equity model, and relative valuation model.

Capital Asset Pricing Model

The first parameter represents the risk free rate which is represented by the yield to maturity of Australia 10 year government bond --- find your bond rate from RBA website

Discuss how you calculate beta --- (see Beta video)

represents market return, please use 0.09826 (9.826%)

Dividend Discount Model

Analyse historical dividends over the past 5 years (present in a table). Find out historical dividend growth rate

Then provide your forecast of growth rates and dividends. You will need to use the multi-stage DDM model.

We recommend you to use the 3-stage model, please watch the video about DDM for more info

Free Cash Flow to Equity Model

Calculate historical FCFE first using the formula in the topic 4.

Calculate historical growth rate for the FCFE.

Make your assumptions of the future growth rates

Relative Valuation Model

Use the P/E method.

Suggestions

1. Use industry P/E multiplied by forecast EPS
2. Use peer average P/E multiplied by forecast EPS
3. Use historical P/E multiplied by forecast EPS

Valuation Summary

Based on the three valuation methods, summarise the outcome

Conclusion

Conclude the report and provide an overall buy/hold/sell recommendation

Also, PowerPoint slides pitchthe company, investment, and recommendations