Question

Appraise impact on the selected stocks, UOL and CapitaLand using the following techniques:

(a) Fundamental analysis

(15 marks)

(b) Determine their intrinsic values

(10 marks)

(c) Apply technical analysis and discuss on the trends of the TWO (2) stocks, including entry and exit levels.

(15 marks)

Some information:

Technical analysis tries to forecast the direction in which the stock price will move over the short term interval. The basic principle behind technical analysis is that share price moves in predictable pattern and if one can identify the pattern, he or she can predict whether the share price will increase or decrease over the short term. In technical analysis, charting is commonly used to identify the pattern of stock price movement. The technical analysts also use technical indicators to identify the stock price movement.

In fundamental analysis, the analyst tries to forecast the future cash flows that a firm can generate and also assess the riskiness of these cash flows. The riskiness of the cash flow is identified in the discount rate. Once the future cash flows are estimated, these cash flows are discounted at the risk-adjusted rate to arrive at the value of the shares. The value is then compared to the market price to see whether the shares are under- or over-valued. If the stock is considered under-valued, they will be bought. If the shares are considered over-valued, they will be sold. Thus, the major purpose of fundamental analysis is valuation of shares.

Other information:

Information from Appendices UOL and CapitaLand should be utilized UOL last price SGD7.10 CapitaLand last price SGD3.62 Some useful information sites: www.mas.gov.sg http://www.singstat.gov.sg/ www.bloomberg.com http://www.jll.com.sg/singapore/en-gb http://www.colliers.com/en-gb/singapore http://www.straitstimes.com/businesso-relief-in-sight-for-property-stocks

CapitaLand

UOL

Segmental Breakdown FY Dec Revenues (S$m) 2015A 2016A 2017F 2018F 2019F CapitaLand Singapore CapitaLand China CMA Ascott Others 1,229 2,039 663 744 86.1 4,761 1,192 2,376 588 1,032 65.3 5,252 1,607 2,005 997 775 151 5,536 927 1,641 1,128 794 153 4,643 937 2,360 1,148 814 156 5,414 Total Segmental Breakdown FY Dec Revenues (S$m) 2015A 2016A 2017F 2018F 2019F CapitaLand Singapore CapitaLand China CMA Ascott Others 1,229 2,039 663 744 86.1 4,761 1,192 2,376 588 1,032 65.3 5,252 1,607 2,005 997 775 151 5,536 927 1,641 1,128 794 153 4,643 937 2,360 1,148 814 156 5,414 Total