Business and Entity Valuations Research Assignment
Choice of Firms
In a group of 2-3 members, you must choose an ASX listed firm from the list given below for an in-depth research with a view to valuing the firm. Read the requirements of the assignment before making a selection. Your group and the chosen firm must be finalised within the first two weeks of the semester. Since no two groups can select the same firm, it is your responsibility to get it approved by the lecturer before you proceed with the assignment.
Cohort 1 (Monday)
- Genesis Power Limited
- Amaysim Australia Limited
- Mobilicom Limited
- Breville Group Limited
- National Storage REIT
- Ten Network Holdings Limited
- Avita Medical Ltd
- Bega Cheese Limited
- Australian Dairy Farms Group
- Apac Coal Limited
- Helloworld Travel Limited
- IDP Education Limited
- Sky Network Television Limited
- PWR Holdings
- Amcor Limited
- Rubik Financial Limited
- Digitalx Limited
Cohort 2 (Wednesday)
- Afterpay Holdings Limited
- Meridian Energy Limited
- Nick Scali Limited
- Kathmandu Holdings Limited
- Aventus Retail Property Fund
- Village Roadshow Limited
- Monash IVF Group Limited
- Pental Limited
- Pacific Dairies Limited
- Fitzroy River Corporation Limited
- Challenger Energy Limited
- Michael Hill International Limited
- Orbital Corporation Limited
- Apollo Minerals Limited
- Nexus Minerals Limited
- Rewardle Holdings Limited
- Activistic Limited
- Mayfield Childcare Limited
Company assigned us for research is micheal hill.
Requirements for Research Assignment
You will conduct an in-depth research and prepare a report on the background of your chosen firm, evaluate the qualitative and quantitative aspects (which are the key inputs of valuation) state your assumptions and estimate the value of the firm and its equity using any one valuation model discussed in this unit.
This assessment component intends to develop your skill in researching a firm from a valuation perspective and building assumptionsthat can be clearly justified based on the data. The objective of this assessment is to highlight the importance of qualitative data in supporting quantitative data and to assess your ability to diligently analyse the crucial inputs in valuation keeping in mind the varying degrees of sensitivity of the inputs to the final value of the firm.
You are required to submit a word document and an excel spreadsheet-
Steps for valuation:
Step 1: Conduct a business strategy analysis of the chosen company using the five-forces model discussed in Chapter 2 of the textbook. Based on this, make assumptions about the firm's growth phase: is your firm in a stable growth phase or two-stage growth phase? Justify the basis of your assumption.
Step 2: Recast financial statements (balance sheet, income statement, and cash flow statement) based on the format given in textbook Chapter 4. Refer to Chapter 9 of Damodaran's book for lease and R&D adjustments.
Step 3: Conduct Ratio and DuPont analysis (focus only on important ratios in all categories).
Step 4: Work out all the variables required for valuation of the firm and equity:
- Beta of the firm
- Length of high growth period with justification, if relevant, from step 1
- Current growth rate using any one: net income, EPS, dividend, or EBIT
- Assume an appropriate stable growth rate (refer to Chapter 12 of Damodaran's book for a better understanding of stable growth rate)
- Adjusted earnings (for lease and R&D adjustments)
- Reinvestment rate
- Terminal value
Step 5: Use any one valuation model to estimate the value of the firm and value of equity (refer to textbook Chapter 7 for valuation models and Chapter 12 of Damodaran textbook for terminal value calculation). Provide justification for the choice of the model in your word document.
The word document must contain the following:
Coversheet (signed by every group member)
Executive summary
Company background
Business strategy analysis
Discussion about any accounting adjustments made
Justification of assumptions made in regards to whether the firm is in a stable growth phase or a two-stage growth phase and based on it the firm's expected growth rates until perpetuity.
Conclusion about the value of the firm and value of equity
Word count: 2500 words (+/- 5%).