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FINM1415 Introduction to Finance

Semester 2, 2023

FINM1415: Individual Report

Key Information

• Due Date: 06 Oct 2023, 14:00 (Brisbane Time)

• Attach a cover sheet as the first page of your work

• The individual assignment has a total marks of 100, which count towards 30% of your final grade.

• The individual report has two parts. Part A is a stock valuation report; Part B is a self-reflection report.

Objective: This assignment aims to get you to experience analysis on a stock. You are asked to conduct a stock evaluation using various financial models and recommend an investment to a client. You also need to draw from your learning journey/experiences to complete a self-reflection report.

Part A: Stock Valuation Report

Deliverable: The stock valuation report should have a maximum of 5 pages (excluding cover sheet, spreadsheets, reference list, and appendix, and excluding the self-reflection report). You should include all critical information in these five pages; your clients should not need to go through either the excel spreadsheet or appendix to acquire necessary information.

You have the freedom to create the report in any style that you like. However, the report should be presented professionally.

Submission instructions:

When you save your documents, name them as Tutorial_Surname_Given name.pdf

For example, if you are in Tutorial EX_1 and your name is “John Smith”, then save your assignment as EX_1_Smith_John.pdf

Use “Individual Blackboard Submission Link” to submit BOTH PDF documents and EXCEL spread-sheet (if any). You do not need to combine PART A and PART B into a single document. Blackboard allows you to submit multiple files under the same attempt.

Use ‘Individual Turnitin Submission Link” to submit ONLY WORD document for your PART A .

You can submit the document for an unlimited number of times. However, only the last version will be marked. Instructions on how to use TurnItIn and Blackboard can be found here:

• Click here to learn more on TurnItIn Submission

• Click here to learn more on Blackboard Submission

Preparation:

You have the flexibility to select a company (other than your assigned company for Week 6 presentation) which is in the same industry that you have presented in your team presentation. Note that all companies have to be different across your group members. Please refer to the excel files (i.e. "FINM1415 Assessment - List of Companies" and "ASX200 List of Companies" for more information.

Where to source the data?

• Capital IQ for analysis, ideation, and e provides a wealth of financial data about listed companies with an array of tools for analysis, ideation, and efficiency. Please sign up for a login using your @student.uq.edu.au email address at https://www.capitaliq.com/ciqdotnet/login.aspx. Click on New User to register.

• DatAnalysis Premium provides access to Australian and New Zealand listed company in-formation. You can access this through the UQ library: http://datanalysis.morningstar. com.au.ezproxy.library.uq.edu.au/

A workshop will be run to teach you how to use these databases, the relevant information are updated on Blackboard.

Start of the Question

Assume “today” refers to the end of the financial year 2023.

Part 1: Fundamental Analysis (65 marks)

1. (5 marks) Include a short introduction about the company.

2. (30 marks) Carry out valuation using the Dividend Discount Model (DDM). Your analysis should address:

(a) (5 marks) The estimation on equity cost of capital.

(b) (15 marks) The estimation of growth rate clearly states how you measure growth rate. For example, what variable would you use to estimate the growth rate? What is the time horizon of your choice? What other qualitative factor may affect your estimation?

(c) (10 marks) Use inputs you specified in part (a) and part (b) to carry out a DDM valuation. What recommendation would you make about investing in this stock?

3. (15 marks) Provide an assessment of the company using at least 3 value multiples. Interpret the multiples and discuss the company’s relative position in the industry. What recommendation would you make about investing in this stock today?

4. (5 marks) Compare your recommendation between using DDM and value multiples, do they give you the same recommendation, why? If not, why would they differ from each other, and which valuation approach would you recommend for your company?

5. (10 marks) Assume that the most recent announcement of the company indicates that they will increase the dividend payout ratio by 10%. Discuss how would this affect your recommendation on this stock.

Other assumptions that you may need:

• Assume the risk-free rate is 2.5%.

• Market portfolio return is 7%.

Bonus Question (Optional 5 marks): In the lecture, we briefly touched on the Discounted Free Cash Flow model for evaluating stock value. If you are enthusiastic about learning more by yourself, you can use this method to evaluate the stock value. Please note that marks will only be given if the model is used correctly and the assumptions are properly addressed.

Part 2: SEAL Reflection - Situation, Effect, Action and Learning (30 marks)

Self-reflection is the best way to develop your understanding of your own practice for future improve-ment. The SEAL reflection method is a structure that guides you to think about your journey in four aspects: Situation, Effect, Action and Learning.

As part of your journey in this course, we ask you to put down some notes by writing 1-2 sentences or a couple of keywords to reflect the challenges you have encountered. Now, upon completing your individual report, use these notes as your benchmark to evaluate your journey. Firstly, take some time to appreciate how much you have achieved, and then lets unfold those challenges and think about what you have learnt. If you have not yet identified any challenges with the tasks so far, there should also be a moment that you consider yourself come to a deeper realization and understanding of the task.

Your reflection needs to be critical. You need to move beyond merely describing your learning ex-perience but to highlight, explain and analyse the changes in your understandings and approaches resulting from the experience.

You may wish to discuss various aspects that reside with your personal experience:

• What you have learned about applying textbook knowledge to real-world situations. What are the challenges of dealing with real-world analysis? Is there anything particular to the company of your evaluation that you find challenging to address?

• What you have learned about working collaboratively in a team. How effective is your team communication, and what would that look like if you worked in a firm. And how did you manage to keep the productivity going despite your role in the team? Have you discovered your strength of working in a team?

• The implications of what you have learned for your future professional practice - how would you develop your professional capabilities, and how would you work on the areas you need further development?

Use the attached template: “FINM1415 SEAL Reflection” to complete your self-reflection. This document will be submitted to blackboard as PART B of the individual report.

Document formatting and presentation (5 marks)

• Your document should be structured in a cogent and compelling sequence of ideas organised in paragraphs. You should demonstrate a highly developed understanding of the requirements of formal argumentative writing.

• Your expression is eloquent, with no lapses in grammar, spelling or sentence.

• Formats and professionalism: Document formatting and presentation is neat and profes-sional. References are properly included.

• Reference Style: You can use either the APA(7th edition) or UQ Harvard reference style. Both styles can be accessed from  https://guides.library.uq.edu.au/referencing.

Part A Marking Criteria:

Have Questions?

.  Check the Assessment Guidelines if you have questions about submitting the assessment.

.  Post your question on the Discussion board if you cannot find answers from the above sources. This is the best way to keep the conversation efficient and transparent for other students.