BAFI2077 Investment Analysis - Research Project and Presentation
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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: o Company name o Exchange o Ticker symbol o Sector o Industry
o Recommendation (buy/sell/hold) o Current price (as of __ date) o 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
o Introduction (Business description; o Corporate Strategy
Section 2: Company Level Analysis ******** I need the excel for this part
Historical Financial Performance
Financial Ratio Analysis
Suggestion: Du Pont analysis.
SWOT Analysis
Section 3: Industry Level Analysis
1
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********* I need the excel file for this part
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******
Ri =Rf +ß[RM - Rf]
The first parameter Rf 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)
RM represents market return, please use 0.09826 (9.826%)
Ri =Rf +ß[RM - Rf]=?
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 multistage 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 pitch the company, investment, and recommendations
Rubric is below