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As a Financial Advisor of
a listed company on
Singapore Stock Exchange and you were given a task by the company to find the value of the company and its share
valuation.
Company: Yeo Hiap Seng Limited (Y03.SI)
Use a
set of published annual reports in addition to the online published information in Singapore Stock Exchange during the most
recent five-seven years e.g. 2015-2021 to find the value of the company and its
shares using appropriate valuation techniques. Your report should clearly
include the following:
The rationale for the choice of the valuation technique(s).
The sources of information and any assumptions you made.
Company’s cost of equity; Critically discuss on the differences in the
estimates you obtained if you used alternative models.
Company’s weighted average cost of capital (WACC). Show all calculations with
respect to the cost of each source.
A
comparison between your calculated value with the current market price per
share and the company market value. Advise on the appropriate decision by the
companies’ shareholders and potential investors.
Does companies board attributes and ESG performance affect your company’s
valuation. Discuss critically.
Notes:
1. Style/Presentation:
business style report; Presentation of your work is important and should look
professional.
2. Word limit: 2,000
including a brief introduction about the company and excluding your own
relevant appendences (e.g. tables, calculations, other secondary materials,
etc.). Do not include the full annual reports in the appendix.
3. Your
report can utilise information available from the web, you may also use Capital
IQ, Thomson Eikon, BoardEx, DataStream, Bloomberg, Yahoo Finance, FAME, CSMAR
and ft.com in addition to oth

er web resources.
The
following is a suggested outline for your valuation report;
1)
Executive
Summary
You
should provide an executive summary of your results and conclusions in no
more than 300 words.
2)
Description of the Company
A brief description of
the company, its history, product lines, recent acquisitions, plans for
future products/services etc. keep this section brief and to the
point while highlighting all the factors which are likely to impact
future financial performance of the company.
3)
Industry
Analysis
A brief analysis of the
industry including growth of the industry, competitive pressures and threats,
future prospects of the industry etc.
You should also
put your company in its
context within the industry.
4)
Historical Financial
Data and Forecasts
A brief summary of
historical financial data including trends and growth in company’s revenues,
income, cash flows, assets,
debt, profitability etc.
The historical growth rates
in key financial items may serve as the basis for future financial projections.
Provide financial projections for a
reasonable future period based on your chosen valuation method (dividends,
free cash flows etc.). All projections and estimates should be supported with
reasons given for forecasted growth/decline rates.
5)
Valuation
Use any two methods to
value the company (total and per share). Support your choices of methods used
and how you used them. You should provide sufficient supporting data
and details to understand your methods and follow
your valuations. Clearly outline the
assumptions and data used in calculating cost of capital (required rate of return).
6)
Conclusion
Provide
a brief conclusion summarising your findings and methods used in the
valuation.