| AFIN312 Issues in Corporate Finance Semester 2, 2018 |
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| The company selected for this report is: | Company Name: Woolworths Limited Ticker code: WOW.AX |
Your analyst team (comprising 5 students) must advise a well-diversified high net-worth individual who is interested in investing in shares with a fundamental value greater than the share price.
As financial analysts, you are required to write a detailed recommendation report on whether to
invest in the selected company.
Your report shall be divided in 5 Sections (preceded by a brief executive summary) to address the
following questions of your client:
1. What are the competitive forces behind the industry’s structure? How does competition affect the
margins of the industry and the company? How does the company’s profitability compare relatively to its peers (you should select between 3 and 5 industry peers)? What is the firm’s business
strategy? Please highlight potential investment risks the company could face in the future (please
refer to Lectures 1 and 2);
2. Analyse how the market is pricing the firm using different relative (or market) valuation techniques. Please use the same group of industry peers identified in the previous section (please refer to Lectures 3 and 4);
3. Estimate carefully the cost of debt, cost of equity and cost of capital for this company (please refer to Lectures 6 and 7);
4. Estimate the free cash flows of the company (please refer to Lectures 8 to 10);
5. Estimate the target price of the company, issue a buy/hold/sell recommendation to your client,
and draw your conclusion. (please refer to Lectures 11 and 12).
Your report is expected to be submitted by 5:00pm Monday 5 November 2018 (please refer to the
unit guide for more information about late submissions). Your submission should contain all of the
following:
| (i) | A 7 to 10 page recommendation report (in font Times New Roman – font size 11) in Word or PDF, discussing the scope of the work, your justified assumptions, findings and recommen |
dation. Please refer to examples of professional analyst reports (available on iLearn) when
formatting your team report;
(ii) A cover page indicating: (a) your team name; and (b) members’ name, student number,
email address. You can also decide to allocate sections of the assignment to team members – making sure to indicate though this allocation on the cover page – to limit the risk of free-riding behavior. Please also identify the team leader for email correspondence. Your cover page should be the
first page of your assignment;
(iii) A spreadsheet model (in Excel), showing all your numerical assumptions, steps of the estimation, and company’s valuation.
The team leader ONLY should submit the equity report to the Turnitin class-link that will be activated on iLearn. The team leader should also submit the Excel file containing all the calculations in a
separate folder that will also be available on iLearn. Please give both these files your team name (e.g.,
BestTeamEver01.xls, and BestTeamEver01.doc or BestTeamEver01.pdf). More information on the
submission process will be provided in class in Week 4.
The marking criteria will be as follows:
| Criteria | Marks |
| Assumptions and bases | 10 |
| Numerical accuracy | 5 |
| Interpretations and Recommendation | 10 |
| Overall quality of the report (format and language) | 5 |
| Total | 30 |