Business and Entity Valuations


FIN80002 Business and Entity Valuations
Semester 2 2017
Choice of Firms
In a group of 2‐3 members, you must choose an ASX listed firm from the list given below for
an in‐depth research with a view to valuing the firm. Read the requirements of the assignment
before making a selection. Your group and the chosen firm must be finalised within the first
two weeks of the semester. Since no two groups can select the same firm, it is your
responsibility to get it approved by the lecturer before you proceed with the assignment.
Cohort 1 (Monday) Cohort 2 (Wednesday)
Genesis Power Limited
Amaysim Australia Limited
Mobilicom Limited
Breville Group Limited
National Storage REIT
Ten Network Holdings Limited
Avita Medical Ltd
Bega Cheese Limited
Australian Dairy Farms Group
Apac Coal Limited
Helloworld Travel Limited
IDP Education Limited
Sky Network Television Limited
PWR Holdings
Amcor Limited
Rubik Financial Limited
Digitalx Limited
Afterpay Holdings Limited
Meridian Energy Limited
Nick Scali Limited
Kathmandu Holdings Limited
Aventus Retail Property Fund
Village Roadshow Limited
Monash IVF Group Limited
Pental Limited
Pacific Dairies Limited
Fitzroy River Corporation Limited
Challenger Energy Limited
Michael Hill International Limited
Orbital Corporation Limited
Apollo Minerals Limited
Nexus Minerals Limited
Rewardle Holdings Limited
Activistic Limited
Mayfield Childcare Limited

FIN80002 Business and Entity Valuations
Semester 2 2017
Requirements for Research Assignment 2

You will conduct an in‐depth research and prepare a report on the background of your chosen
firm, evaluate the qualitative and quantitative aspects (which are the key inputs of valuation)
state your assumptions and estimate the value of the firm and its equity using any one
valuation model discussed in this unit.
This assessment component intends to develop your skill in researching a firm from a
valuation perspective and building assumptions that can be clearly justified based on the data.
The objective of this assessment is to highlight the importance of qualitative data in
supporting quantitative data and to assess your ability to diligently analyse the crucial inputs
in valuation keeping in mind the varying degrees of sensitivity of the inputs to the final value
of the firm.
You are required to submit a word document and an excel spreadsheet (details given below)
in fulfilment of Research Assignment 2.
Steps for valuation:
Step 1: Conduct a business strategy analysis of the chosen company using the five‐forces
model discussed in Chapter 2 of the textbook. Based on this, make assumptions about the
firm’s growth phase: is your firm in a stable growth phase or two‐stage growth phase? Justify
the basis of your assumption.
Step 2: Recast financial statements (balance sheet, income statement, and cash flow
statement) based on the format given in textbook Chapter 4. Refer to Chapter 9 of
Damodaran’s book for lease and R&D adjustments.
Step 3: Conduct Ratio and DuPont analysis (focus only on important ratios in all categories).
Step 4: Work out all the variables required for valuation of the firm and equity:
 Beta of the firm
 Length of high growth period with justification, if relevant, from step 1
 Current growth rate using any one: net income, EPS, dividend, or EBIT
 Assume an appropriate stable growth rate (refer to Chapter 12 of Damodaran’s book
for a better understanding of stable growth rate)
 Adjusted earnings (for lease and R&D adjustments)
 Reinvestment rate
 Terminal value

FIN80002 Business and Entity Valuations
Semester 2 2017
Step 5: Use any one valuation model to estimate the value of the firm and value of equity
(refer to textbook Chapter 7 for valuation models and Chapter 12 of Damodaran textbook for
terminal value calculation). Provide justification for the choice of the model in your word
The word document must contain the following:
 Coversheet (signed by every group member)
 Executive summary
 Company background
 Business strategy analysis
 Discussion about any accounting adjustments made
 Justification of assumptions made in regards to whether the firm is in a stable growth
phase or a two‐stage growth phase and based on it the firm’s expected growth rates
until perpetuity.
 Conclusion about the value of the firm and value of equity
Word count: 2500 words (+/‐ 5%)
The excel spreadsheet must contain the following:
 Raw data: balance sheet, income statement, cash flow statement for previous three
 Re‐casted data: balance sheet, income statement, cash flow statement for previous
three years
 Ratio analysis
 DuPont analysis
 All valuation variables
 Value of the firm and value of equity
Note: All ratios and calculations should have formulas on the “formula view” and
annotations on the cells with actual formula used.
Submission requirements:
 Submit the assignment on Blackboard via the submission link under “Research
Assignment 2” in the Assessments tab
 Submit assignment in 2 parts:
o word document (must include signed coversheet), and
o excel spreadsheet
 Only one member from each group must upload the assignment

FIN80002 Business and Entity Valuations
Semester 2 2017
Marking Criteria for Research Assignment 2
Word document (10 marks)
Executive summary, company background, business strategy: 5 marks
Discussion, justification and conclusion: 5 marks
Excel Spreadsheet (10 marks)
Financials: Raw data and recasted: 3 marks
Ratio and DuPont Analysis: 3 marks
Value of firm and equity (including all variables): 4 marks
Total marks: 20