Reasons of Selecting Bank Muscat
Sultan Qaboos University
College of Commerce & Economics
Finance
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Individual Project Assignment
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Done by: Jameela Ali Al Hamhami
ID : 23990
Contents
Introduction 3
Executive Summary 3
Bank Muscat at Glance 4
Reasons of selecting Bank Muscat 5
The Analysis 6 Beat calculation 6 Comparison between risk and return in 2007 and 2008 7
Calculating WACC 8 Calculation of WACC on book value basis 9 Calculation of WACC on Market value basis 10
Conclusion 11
Introduction
In my report as requested I picked one component of MSM30 Index sample. I have chosen to talk about Bank Muscat Share (BKMB) to analyze its performance based on historical trading data from the period of 2005 to 2008 and comparing it with the performance of the market performance represented by MSM30 Index. In addition, the report studied the relationship between the risk indicator "Beta" of the firm and the required rate of return that are asked by investor to invest his/her capital in that stock. This is in return the cost of capital for the company.
Executive summery
Bank Muscat is very well known institution in the area and one of the main competitors in banking sector. He is really expanding very fast, he have an excellent management team. The bank has raised the money to finance his investments through both equity and debt (bonds). Currently the outstanding number of shares of the bank is (1,077,133,715) and trades in the market for 0.84 Baisa. Imperative to mention is that the bank had implemented stock split on March 2006, his par value now is .100 Baiza. The analysis show that the bank was doing well in the past few years but poorly in 2008 and this is because of the world financial crisis which affects all the markets around the world, in general the overall trend of the market in 2008 was going down. Analyzing the cost of capital of the bank either using book value
College of Commerce & Economics
Finance
[pic]
Individual Project Assignment
[pic]
Done by: Jameela Ali Al Hamhami
ID : 23990
Contents
Introduction 3
Executive Summary 3
Bank Muscat at Glance 4
Reasons of selecting Bank Muscat 5
The Analysis 6 Beat calculation 6 Comparison between risk and return in 2007 and 2008 7
Calculating WACC 8 Calculation of WACC on book value basis 9 Calculation of WACC on Market value basis 10
Conclusion 11
Introduction
In my report as requested I picked one component of MSM30 Index sample. I have chosen to talk about Bank Muscat Share (BKMB) to analyze its performance based on historical trading data from the period of 2005 to 2008 and comparing it with the performance of the market performance represented by MSM30 Index. In addition, the report studied the relationship between the risk indicator "Beta" of the firm and the required rate of return that are asked by investor to invest his/her capital in that stock. This is in return the cost of capital for the company.
Executive summery
Bank Muscat is very well known institution in the area and one of the main competitors in banking sector. He is really expanding very fast, he have an excellent management team. The bank has raised the money to finance his investments through both equity and debt (bonds). Currently the outstanding number of shares of the bank is (1,077,133,715) and trades in the market for 0.84 Baisa. Imperative to mention is that the bank had implemented stock split on March 2006, his par value now is .100 Baiza. The analysis show that the bank was doing well in the past few years but poorly in 2008 and this is because of the world financial crisis which affects all the markets around the world, in general the overall trend of the market in 2008 was going down. Analyzing the cost of capital of the bank either using book value