Content Requirements (for the 10 page report)
For CLP (China Light and Power Co Ltd) – stock code: HKG: 0002
- An initial valuation based on valuation Dividend discount model DDM and Discounted cash flow (DCF)
2) A quick valuation using accounting-based valuation models Residual Income Model (RIM) and Abnormal Earnings Growth (AEG) model – [Excel templates have been included] using
Annual reports (https://www.clpgroup.com/en/investors-information/financial-reports/our-reports?year=2017) and
Yahoo Finance (https://finance.yahoo.com/quote/0002.HK?p=0002.HK&.tsrc=fin-srch)
Use any other publicly available information (such as 10-k reports) if required
You need to use sensitivity analysis to analyze the sensitivity of model results to your assumptions. Provide a building block analysis of the current market price and reverse engineering what is the market expectation of the long-term growth rate. Discuss how these analyses help to evaluate the current market price.
3) Prepare an implementation of Residual Operating Income (ReOI) Model valuation with simple forecasting, and full information forecasting that starts with analysts’ sales forecasts (or you need to come up with your own sales forecast if unavailable) and prepare a valuation grid based on sensitive assumptions. Take into account any important additional factors (stock option exercises, outstanding stock options, research and development expenditure, contingent liabilities such as operating lease, or other contingent commitments).
4) provide a valuation summary and a final investment recommendation (buy, sell, and hold) about your company.
Method
Firstly read through the lecture notes and go through the tutorial notes. Examples given in lecture slides are of Walmart and Facebook.
Make the Excel Sheets for CLP as this is required to write up the analysis on the report (Templates given)
Write up the 10 page report by applying figures on excel sheets to CLP. Use Content highlighted in Red to be Topics and content highlighted in Green to be subtopics in the report.
Final Deliverable
- 10 page report
- Excel Sheets (If you do a third excel sheet to analyze ReOI upload that too)
- Appendix (only if necessary)