FINANCE 361 Two Degrees Mobile Limited assignment 代写

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FINANCE 361 Two Degrees Mobile Limited assignment 代写

FINANCE 361 - Assignment 2

1.Deadline and Submission

The deadline for this assignment is 17 Oct 2017 at 23:55. Submission is

via CANVAS for the PDF document and the supporting Excel

calculations. You should submit the Excel spreadsheet to Assignment 2

Valuation spreadsheet and the PDF document to Assignment 2 -

Valuation document (which is linked to Turnitin).

2.Context

Since joining Megabank Asset Management three months ago you have

been busy learning the ropes. You are about to grab dinner at 7pm

when your line manager, Charles de Vitry, sends you an email,

reproduced below:

From: Charles de Vitry : Global Investments <charles.devitry@mam.com>

To: Sally Baum : Global Investments <sally.baum@mam.com>

Subject: Valuation of Bunnings Limited for tomorrow at 10am

Hi Sally

I’ve just been told by Peter from the Investment Committee that we have been

approached to bid on the equity of Two Degrees Mobile Limited (Two Degrees). To

start the process we are expected to submit an Expression of Interest form, in

which we have to indicate the price we would be happy to pay. Although this is

purely indicative and not a legally binding commitment, it is considered bad form

to back out of an expression of interest. The Investment Committee will be meeting

tomorrow at 10am to discuss our Two Degrees valuation; they will be expecting me

to have an opinion about the value of Two Degrees. So I need your help: Can you

run some numbers and come up with an equity valuation for Two Degrees as a

whole? I’ll need a 3-page summary (in pdf format please). I’d like a brief overview

of Two Degrees, a description and motivation of your valuation approach, key

assumptions and valuation drivers, the actual base case valuation (of the equity of

the whole firm) and some scenario analysis showing what the valuation might look

like if we change the key valuation drivers. I’ll be presenting this to the committee

so make sure it looks professional. You should be able to locate financials for Two

Degrees at their website . You can use any information that is publicly available. Be

sure to send me your Excel calculations just in case I get challenged on any of the

numbers.

I’ll be boarding my plane in 15 mins and should be back in town tomorrow morning by

9:15am. It would be great if you could email me the overview before then so I can have

a look at it while taking the taxi to the meeting.

Thanks, Charles

3.Required

If anything is unclear, do feel free to raise it in class. To be fair to other

students, I won’t be providing clari cation on an individual basis or via

email (other than in exceptional cases).

Please write up a document as requested by Charles de Vitry above.

The document should be in pdf format, and should be limited to 3

pages (including charts and graphics, excluding referencing). You can

include charts and graphics if you feel that helps you communicate

more clearly. You can use any information that is publicly available.

You will need to submit your calculations (ie Excel spreadsheet), so

make sure it is structured in a way that is easy to follow.

NOTE: This assignment may provide less structure and guidance than

you are used to. This is intentional: guring out what you need to do is

part of the assignment! It helps to imagine yourself as the customer:

what would you like to see if you were Charles de Vitry?

See https://www.companiesoffice.govt.nz/companies/app/ui/pages/companies/1117222/docum

The last of the reports have been downloaded for you as examples

(can be found on CANVAS under Assignment 2)

4.Grading

I will roughly allocate grades according to the breakdown below.

However, you will only receive an overall grade.

•Overall presentation - 20%, Overview - 10%

•Motivation of valuation approach - 20%

•Key assumptions and valuation drivers - 10%

•Valuation and scenario analysis - 30%

•Others (presentation of Excel spreadsheet, referencing etc.) - 10%

5.Helpful Hints 1: One way to approach the valuation of a

company

•You should already know how to do the calculations for a

valuation that is what the second part of this course is all about.

So what follows is really a bit of a guide about the rest of the

process...

•Stage 1: Find the key documents and information so you

understand the business you are valuing and the industry it

operates in (and the country or countries, if you are not familiar

with it/them)

Financials (aka Annual Reports, Interim Reports)

C o m p a n y w e b s i t e

Wikipedia entry

Regulatory lings

News reports (google, factiva, reuters, bloomberg)

Same for other rms that are comparable

•Stage 2: The business

What types of business does the company do? How does it

make money? Who are its customers, its suppliers, its

employees, its regulators?

How is the company funded? Who owns the equity in the rm?

Is it listed? Does it have any debt? Bonds, shareholder loans

or bank loans? What are the terms - interest rate, maturity?

What are the drivers of growth, market share and pro

tability?

Who are its competitors?

Key risks and opportunities

•Stage 3: The valuation approach

What is the appropriate valuation approach for the company?

Refer back to notes and readings for guidance.

Sketch out a mindmap of the valuation. Start with the basics

- cash ows and discount rates - then work out backwards

what you need in order to calculate each component until

you arrive at underlying inputs or assumptions.

•Stage 4: The model

Build the model in Excel. (This is where most inexperienced

people start... )

Build in checks and balances

Do a reality check - try a few quick and dirty calculations.

Based on your valuation, what is the implied growth rate?

What is the P/E ratio? Does it make sense? How does it stack

up against competitors?

Conduct sensitivity analysis on the important model inputs.

Conduct scenario analysis for key uncertainties.

∗ Sensitivity analysis: Example: If beta increases by 1%,

then the value of equity increases by ?%

∗ Scenario analysis: Value of equity given growth of (0%, 1%,

..., 10%) [Often best represented graphically or in a

table]

• Stage 5: Presenting the valuation

Presentation should address the following points

The valuation midpoint and range. (Any reader should be able

to nd this in under 2 seconds after picking up the document.)

∗ Include valuation target name, valuation date and valuer

contact details (that’s you!)

Why are you doing the valuation, what will it be used for,

who is using it?

Firm and industry overview

FINANCE 361 Two Degrees Mobile Limited assignment 代写

Description and motivation of the chosen valuation approach.

What approach did you take and why did you decide on it.

(Motivate the decisions you made re valuation approach) Key

inputs and assumptions.

Overview of the valuation calculation. Often best presented

in a table format.

Sensitivity analysis and scenario analysis. (Graphs can be

useful here.)

Disclaimer. (Not needed for assignments, but in the real

world you’ll need one. Talk to the people in your legal

department, or ask a lawyer for help.)

Proofread the document for spelling mistakes and

grammatical errors. Ensure the presentation looks

professional. (Muted and few colours, clear headings - search

for investment bank research notes to see how others do it.)

• In real life you do not always progress smoothly from one stage to

the next; often there is a bit of moving back and forth as you run

into problems or discover new information.

6.FAQ

Q1: We are getting one mark instead of two marks for assignment 2,

does that mean the Excel model is not going to be marked?

For assignment 2 you will receive an overall grade rather than two

separate grades for the Excel model and the pdf written document. We

will be looking at both les, and both parts count towards the overall

grade.

Q2: What is the purpose of the EXCEL spreadsheet?

Your Excel model should contain the supporting calculation of your

valuation. Both the Excel le and the pdf written document should be

clearly constructed and professionally formatted so that they are easy

to follow. Also, be sure to address the speci c requirements listed in the

assignment instruction (company/industry overview, sensitivity and

scenario analysis, etc.).

Q3: Can I use an existing excel template?

We recommend that you start fresh and build a model according to your

model description for assignment 2. However, feel free to look at other

valuation model spreadsheets as examples. You can also refer to the

assignment 1 Excel template as an example of a well-constructed and

presented Excel model.

Q4: What is the purpose of the written document?

Your written document should include a description of the valuation

model (what approach did you take, and why did you decide to use that

particular approach). It is also important to state the key results of

your valuation in the document. The reader should be able to

understand the valuation approach that you have chosen and the key

valuation results before looking at the Excel le. Also, remember to

state clearly the assumptions made in the valuation.

For the assignment, you should use a valuation approach that is

appropriate and logical for the target company. In the assignment, you

will be assessed on how well you can explain and motivate the

approach chosen, and how well the valuation was carried out.

Q5: Can I use estimates retrieved from external sources instead of

calculating my own for the assignment?

You can use any publicly available information for assignment 2,

including research results and estimations produced by others.

However, you should provide a short description of how the authors

derived the gures and justify why this is suitable to use given your

chosen valuation approach.

If you are using external materials and data, you should also cite the

source in your report and/or Excel model. A suggested referencing style

is the APA convention (for more details - http://

www.library.auckland.ac.nz/ subject-guides/bus/topicguides/

apa_for_business.htm )

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FINANCE 361 Two Degrees Mobile Limited assignment 代写