Q1. Compute a fair value (i.e. intrinsic value) of Mary Chia's stock based on the relative valuation models in (a)-(b). Support your analysis with assumptions. a) Find Intrinsic value of Mary Chia by using P/B relative valuation model in equation (1). [10 marks] BookvalueofMCHIntrinsicTVofMCH=(BookvalueTV)benchmark Where TV = Total Value = Price \#shares outstanding Intrinsic Price * \#shares outstanding of MCH BookvalueofMCH=(BookvaluePrice#sharesoutstanding)benchmark#sharesoutstandingofMCHIntrinsicPriceofMCH=(#sharesoutstandingPrice)benchmarkBofMCHIntrinsicPriceofMCH=(BP)benchmark Where B= book value per share Explain your choice of the benchmark (refer to Exhibit 5, 6,8). State and justify all assumptions made. State any concerns if applicable. b) Find Intrinsic value of Mary Chia by using P/S relative valuation model in equation (2). [10 marks] SofMCHIntrinsicPriceofMCH=(SP)benchmark Where S= sales per share Q2. Would you use the P/E relative valuation model in equation (3) to value Mary Chia's stock? [ 5 marks] 1 EofMCHIntrinsicPriceofMCH=(EP)benchmark Where E = earnings per share EPS A qualitative answer is required with explanation to support "Yes" or "No". EXHIBIT 3: MARY CHIA HOLDINGS LIMITED, INCOME STATEMENT Note: SG$= SGD = Singapore dollar, SG $= US $0.7334 on August 24,2017. Source: Mary Chia Holdings Ltd., Annual Report 2014, accessed September 25, 2017, http://infopub.sgx.com/FileOper/MaryChia_AR2014_fullset\%20FINAL.ashx?App=Prospectus\& FilelD=21790; Mary Chia Holdings Ltd., Annual Report 2015, accessed September 25, 2017, http://infopub.sgx.com/FileOper/MARY_CHIA_AR2015.ashx?App=Prospectus\&FilelD=26721; Mary Chia Holdings Ltd., Annual Report 2016, accessed September 25, 2017, http:///infopub.sgx.com/FileOpen/Mary\%20Chia\%20Holdings\%20Limited_AR\%202016.ashx?App= Prospectus\&FileiD=29490; and Mary Chia Holdings Ltd., 2017 Annual Report, accessed September 25, 2017, http://infopub.sgx.com/FileOpen/MCHL_Annual\%20Report\%202017. ashx?App=Announcement\&FileiD=470124. EXHIBIT 4: MARY CHIA HOLDINGS LIMITED, BALANCE SHEET September 25, 2017, http://infopub_sgx.com/FileOpen/MARY_CHIA_AR2015.ashx?App=Prospectus\&FilelD=26721; Mary Chia Holdings Ltd., Annual Report 2016, accessed September 25, 2017, hitp://infopub.sgx.com/FileOpen/Mary\%20Chia\%2OHoldings\% 20Limited_AR\%202016.ashx?App=Prospectus\&FilelD=29490; and Mary Chia Holdings Ltd., 2017 Annual Report, accessed September 25, 2017, hitp://infopub.sgx.com/FileOpen/MCHL_Annual\%2OReport\%202017.ashx?App=Announcement\&FilelD=470124. EXHIBIT 5: MORGAN STANLEY CAPITAL INTERNATIONAL, ALL COUNTRY ASIA, HOTELS, RESTAURANT, LEISURE INDUSTRY INFORMATION Source: Morgan Stanley Capital International, "MSCI All Country Asia, Hotels, Restaurant, Leisure Industry Information," Factset, accessed September 22, 2017. EXHIBIT 6: MORGAN STANLEY CAPITAL INTERNATIONAL, ALL COUNTRY ASIA, HOTELS, RESTAURANTS, LEISURE INDUSTRY INFORMATION, KEY INDUSTRY PLAYERS Note: MV = market value; EV= enterprise value; P/E = price to earnings; EBITDA= earnings before interest, taxes, depreciation, and amortization; EBIT= earnings before interest and taxes. Source: Morgan Stanley Capital International, "MSCI All Country Asia, Hotels, Restaurant, Leisure Industry Information, Key Industry Players" Factset, accessed September 22,2017