NZSX COMPANY VALUATION
DUE: Friday, October 1, 2010 at 12 noon.
Each student must complete a written valuation report based on a publicly listed New Zealand firm.
The report should be no more than six typewritten pages in length (double-spaced, 12-point font, standard margins) plus any exhibits. Any calculations should be included in appendixes attached to the report. The report should contain an executive summary and all references must be included. The report will be graded by the course lecturer on both the quality of the written document and the valuation calculations undertaken.
The valuation project contributes 15% to the overall course grade.
Note: No late valuation reports will be accepted.
Your report should include the following valuation methods:
1) The weighted average cost of capital method
2) The adjusted present value method
3) The flow-to-equity method
4) Valuation using comparables
5) Forecasting free cash flow and discounting at an estimated cost of capital
6) Multiples approach to valuation
It would be wise to provide an introduction and background for your firm which should include a summary of the firm’s performance over the previous 5 years of operation, looking at key financial ratios and interpreting how these have changed during that time. Chapter 2 of the textbook is a good reference for the type of analysis you should be undertaking.
Your goal should be to estimate the current value of a firm’s stock price. You should first try to estimate the enterprise value of the firm. Using this number you should be able to determine the market value of equity and hence estimate the current price per share. The enterprise value is defined as:
Enterprise Value = market value of equity + Debt – Cash
Note: your valuation should also include a sensitivity analysis as any estimation is only as accurate as the information on which it is based. It is important to... [continues]
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