Case Study on Market Efficiency for 2201AFE

The purpose of this case study is to allow students to take some of the main concepts introduced in the course and provide a framework for applying them to a company of their choosing. One of the best ways of learning corporate finance is to apply the models and theories we encounter to real-world contexts and problems. You will evaluate the company stock price, and estimate the impact of an important announcement on its stock prices.  Most importantly, you will learn skills to work collaboratively with your team members.

SCENARIO: You have recently started an internship position with QLD Titanium Equity Management (Q10), a large asset management company with A$750 million Assets Under Management (AUM) located in Brisbane CBD. The company's core investment focuses on domestic share market, however, investments in share markets have provided lower than expected returns in the recent years.

Q10's Chief Investment Officer (CIO) has assigned you and your investment team to perform an investment appraisal on a single company listed on the S&P/ASX200 and provide recommendation if the company analyzed should be included as part of Q10's investment. To assist you on this task, your investment team can consist up to 4 members.

The CIO has requested that your analysis must be up-to-date analysis with at least 3 years of data.

Your report must address the following issues:

1. A brief description of the company analyzed.

2. Analysis of company's share price using:

a. the Dividend Discount Model, or the Reward to Risk Ratio Method. You will determine if the share price is priced fairly or over/under-valued.

b. News/Announcement effect on company's share price. You will investigate the speed of share price adjustment to these announcements.

c. You will need to show calculations for 2(a) and a graph for 2(b).

Your current internship position is under 3 months' probation period. Upon completing the task on hand, your department secretary will arrange a meeting with CIO to discuss whether you have passed the probation period and be promoted to a Junior Corporate Finance Analyst.

Guidance on Case Study:

1. Give a brief description of the company's business, strategy and its competitions (1M)

2. Estimate the stock beta, the cost of equity, and the intrinsic value (7M)

3. Announcement Effect on stock prices (2M)

Choice of Company - You can choose any company from ASX200 (except for TPG) that has been listed on the stock exchange for at least 3 years, and with positive earnings and positive dividend for the 2016/2017 financial year. As soon as you have chosen your company, please use the online signup tools to sign up your group members by week 6. Please contact us if you don't have a group yet by that time, we may be able to assign you to a group.

Attachment:- Assignment File.rar