Students are expected to produce an investment recommendation report about a listed company.
In this report students expose their investment case about the selected company, supported in their valuation analysis. The investment recommendation can be to BUY (if valuation higher than market price) or to SELL (if valuation lower than market price) the selected company. The consistency and quality of the investment case and the supporting valuation exercise, both properly explained, are the topics to be evaluated. The investment report is self-contained, i.e. there are no additional elements to be evaluated.
Specifically, the report should deliver:
1) a discounted cash flow (DCF) valuation of the stock (common equity) in the company by
. identifying the key assumptions for the DCF analysis
• presenting relevant cash flow tables and applied valuation formulas
• estimating how sensitive the value estimates are to changes in the key assumptions
2) a relative valuation of the stock (common equity) in the company by
preparing a list of comparable (peer) companies, using criteria that are justified to be appropriate
• choosing multiples that will be used in comparing companies across the peer group
evaluating the company against its peers using the chosen multiples
3) a final value estimate and investment recommendation by
considering the values obtained from discounted cash flow and relative valuation
making a final investment recommendation on whether to buy or sell the stock of the company
The reference date for the valuation exercise is year-end 2020. The reference market
price is the closing price of the last trading day of June 2020