Part II (ii). Free Cash Flow to Equity (FCFE) Model (Topic 8 Part II) Estimate the intrinsic value of the company's (Sheng Siong Group) shares using the Free Cash Flow to Equity (FCFE) model You must use a 3 stage FCFE model to calculate the intrinsic value of the stock Source the components for FCFE from the company's financial statements using Eikon Calculate the FCFE per share over the past 5 years. The average growth in FCFE per share will be the growth rate for Period 1 Formula FCFE = Net Income + (Depreciation Expense - Capital Expenditures) - A in Working Capital - Principal Debt Repayments + New Debt Issues OR FCFE = Cash from Operating Activities - Capital Expenditures + Net Debt Issued (Repaid) Part II Estimate the growth of FCFE for Period 2 using your macro and micro analysis (Part 1, no. 4) Estimate the terminal (Period 3) growth rate using a proxy that represents the long-term growth rate and calculate the terminal value estimation Calculate the present value of each future year's FCFE to calculate present value, then add them to calculate the intrinsic value of the company Provide justification and reasoning if you use a different growth rate than the one calculated for Period 1 Provide justification and reasoning for your growth rate assumptions for growth in Period 2 and Period 3 Part II (ii). Free Cash Flow to Equity (FCFE) Model (Topic 8 Part II) Estimate the intrinsic value of the company's (Sheng Siong Group) shares using the Free Cash Flow to Equity (FCFE) model You must use a 3 stage FCFE model to calculate the intrinsic value of the stock Source the components for FCFE from the company's financial statements using Eikon Calculate the FCFE per share over the past 5 years. The average growth in FCFE per share will be the growth rate for Period 1 Formula FCFE = Net Income + (Depreciation Expense - Capital Expenditures) - A in Working Capital - Principal Debt Repayments + New Debt Issues OR FCFE = Cash from Operating Activities - Capital Expenditures + Net Debt Issued (Repaid) Part II Estimate the growth of FCFE for Period 2 using your macro and micro analysis (Part 1, no. 4) Estimate the terminal (Period 3) growth rate using a proxy that represents the long-term growth rate and calculate the terminal value estimation Calculate the present value of each future year's FCFE to calculate present value, then add them to calculate the intrinsic value of the company Provide justification and reasoning if you use a different growth rate than the one calculated for Period 1 Provide justification and reasoning for your growth rate assumptions for growth in Period 2 and Period 3
