Analyze 5 Companies Which Are Come from Banking Sector, Media Sector, Telecommunications Services Sector, Consumer Durables Sector and Transportation Sector

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Approach I: “Dividend Discount Model”3
(1) Dividend payout in 7 years3
(2) Constant growth rate estimation4
(3) Net earnings from same sector11
(4) ROE for the companies in the same sample set16
(5) Share price estimation by DDM21
Approach II: “Valuation Multiple”23
1) Price – earning ratio of each sector23
2) Share price estimation by PE ratio28
Reconciliation report30
In this assignment, we are going to analyze 5 companies which are come from Banking Sector, Media Sector, Telecommunications Services Sector, Consumer Durables & Apparel Sector and Transportation Sector. The analyses include: • The last seven years’ dividend payout data of the five companies; • The estimation method used to compute the proxy value for the constant growth rate term; • Net earnings of all the companies from the same or a closely related sector in our sample sets; • The individual ROEs for the companies in the sample sets; • The calculation of average price-earnings ratio, earnings-per-share, expected earnings-per-share and estimated share price applying the “valuation multiple” approach for each of our chosen five companies; • Reconciliation report comparing & contrasting the theoretical share prices obtained using the two different approaches as well as the actual market price for each of our five chosen companies.

Approach I: “Dividend Discount Model”

(1) Dividend payout in 7 years

For banking sector, Australia and New Zealand Banking Group Limited (ANZ) was chosen.
|Dividend (in cents) | |2004 |2005 |2006 |2007 |2008 |2009 |2010 |

(data from http://www.aspecthuntley.com.au.ezproxy-f.deakin.edu.au/af/company/dividendspay?ASXCode=ANZ&xtm-licensee=finanalysis Accessed on 13th August 2011)

For Media Sector, Austereo Group Limited was chosen to be analyzed. |Dividend (in cents) | |2004 |2005 |2006 |2007 |2008 |2009 |2010 |

(data from http://www.aspecthuntley.com.au.ezproxy-f.deakin.edu.au/af/company/dividendspay?ASXCode=AEO&xtm-licensee=finanalysis, Accessed on 13th August 2011) For Telecommunications Services Sector, Telecom Corporation of New Zealand Limited was chosen to be analyzed. |Dividend (in cents) | |2004 |2005 |2006 |2007 |2008 |2009 |2010 |

(data from http://www.aspecthuntley.com.au.ezproxy-f.deakin.edu.au/af/company/dividendspay?ASXCode=TEL&xtm-licensee=finanalysis Accessed on 13th August 2011)

For Consumer Durables & Apparel Sector, Tamawood Limited was chosen to be analyzed. |Dividend (in cents) | |2004 |2005 |2006 |2007 |2008 |2009 |2010 |

(data from http://www.aspecthuntley.com.au.ezproxy-f.deakin.edu.au/af/company/dividendspay?ASXCode=TWD , Accessed on 13th August 2011)

For Transportation Sector, Mainfreight Limited was chosen to be analyzed. |Dividend (in cents) | |2004 |2005 |2006 |2007 |2008 |2009 |2010 |

(data from http://www.aspecthuntley.com.au.ezproxy-f.deakin.edu.au/af/company/dividendspay?ASXCode=MFT-NZ&xtm-licensee=finanalysis , Accessed on 13th August 2011)

(2) Constant growth rate estimation

Dividend Growth can be observed from the...
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