Assignment Brief
The Task
A client would like to invest his money in a company that has listed its shares on the London Stock Exchange. As an investment analyst, you need to write a report on the company that the client is interested in investing. You may assume that the client has an understanding of the risk involved in investment in shares.
you are expected to produce an investment report and recommendation on the shares of this company. This should include the following sections.
(i) Company profile: a single paragraph giving an overview of the company summarising its performance over the last twelve months, its products and the markets in which it operates. The remainder of the first page would summarise data on price performance and valuations. It would end with your recommendation on whether to buy, sell or hold the shares in the company.
(ii) Performance and news analysis: Compare the company’s returns with that of the market as well as calculating the company’s risk adjusted returns. Identify news (which include earnings announcements, release of relevant economic data, analysts’ recommendations) which are relevant to the firm’s price performance as well as supporting your analysis in the report.
(iii) Valuation: Carry out the DDM valuation under the CAPM framework using multistage growth model. Use PE, DY, PB and PS metrics to complement the DDM valuation. The valuation results are presented using the SML. Finally, a discussion on the DDM versus market multiples to inform the client is required.
(iv) Conclusion: This will demonstrate your understanding of the subject and ability to include the results in a coherent summary
Assessment:
The report must be word-processed and submitted electronically; it cannot exceed 2,000 words and should comprise the following:
A summary tear sheet (not more than 1 page)
A main report (not more than 5 pages) to support your analysis based on the analytical elements described in the previous section.
Assessment criteria
The assessment criteria for the investment report are based on the following criteria:
• Provision of relevant financial data in forming the arguments
• Application of valuation models (DDM and market based methods)
• Overall presentation of your report
• Demonstrate your understanding of the relevant topics (such as systematic and firm-specific risk, risk premium, intrinsic value, required rate of return) and your ability to combine the various analyses into a coherent practical conclusion
Specifically, the following marking scheme is used:
Tear Sheet 10%
Risk Adjusted Returns 10%
News analysis both firm-specific and systematic 10%
Multi-stage DDM valuation 20%
Valuation by other methods 10%
SML analysis 10%
DDM and market based methods discussion 10%
Conclusion (include introduction and analyst recommendation) 20%
Total 100%
Company information:
BETFAIR GROUP PLC EPIC CODE: BET
http://www.hl.co.uk/
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