Java Python FINS2615
Intermediate Business Finance
Term 2, 2024
Team Assignment: Stock Pitch (30% of final grade)
Introduction
This team assignment is worth 30% of your final grade. It requires you to form. a team of 4-5 students from the same tutorial to analyse the stock of a publicly listed firm and make a buy/sell recommendation for its stock. All teams in the same tutorial will analyse the same stock.
Team Formation
Form. a team with the following criteria:
1. 4-5 members from the same tutorial group. Anything different requires LIC approval.
2. All genders must be represented in the team and if possible, equally represented.
3. All team members must agree to the terms of the Team Contract.
4. Each team member will assess the contributions of other team members. If there is evidence that any member is free-riding off the work of other members, the free-rider will have marks deducted depending on the severity of the free-riding. A grade of zero will be awarded to free riders who do next to nothing.
Register Team & Submit Team Contract due by 11:55 PM on Sunday of Week 3 (16 June)
1. Each student should register in a team in Moodle.
2. After teams are formed, each team should download the Team Contract and submit in Moodle.
First Deliverable worth 10% is due by 11:55 PM on Sunday of Week 5. (30 June)
· Submit a COMPANY REPORT & PRELIMINARY INVESTMENT THESIS.
This includes submitting a (1) PowerPoint with 9 slides or less (PDF format) and (2) Word document with a link to a 6-minute video presentation. No Excel is required in this deliverable.
· Part A (2-3 minutes in the video): OVERVIEW REPORT of the company, industry and macro environment.
In the first minute of the video, say something like “Hi, we are Team Number [...] of Tutorial [tutorial section] and our tutor is [tutor’s name]. My name is [… take turns to briefly introduce yourselves by name and team role]. This is an initial report on [firm’s name] and gives an overview of the company, industry, and macro environment that is relevant for our preliminary investment thesis. Please note that the preliminary investment thesis we present here may change by the time we present the final investment thesis and valuation at the end of Week 9.” Then start the report.
Ensure that the overview is brief! Assume everyone knows the company, industry, and environment and only want to hear what is relevant to your investment thesis. Don’t waste time. Get to the point!
o Company (1 slide only)
§ What does it do? How does it make money? What is its business model? What are the main products/services? How big is it? What are its main sources of revenue?
§ Brief SWOT Analysis. Focus on those affecting your investment thesis!
o Industry (1 slide only)
§ Who are its main competitors? How do their strengths and weaknesses compare? Brief PORTER analysis of the industry. Focus on those affecting your investment thesis!
§ What are the main challenges in the industry facing competitor firms? Etc.
o Macro environment (1 slide only)
§ What are the major changes in technology, consumer tastes, legislation, environmental, etc affecting the firm? Brief PESTLE. Very brief. Focus on those affecting your investment thesis!
· Part B (3-4 minutes in the video): PRELIMINARY INVESTMENT THESIS
o In 4 slides or less, present your preliminary investment thesis.
o What is an investment thesis? An investment thesis is a set of factors that affect your firm’s value. It is a collection of theories of cause and effect, that if true, will change the long-term value of your firm. It is a group of statements of belief that only time will tell whether they are true or false. It is a bunch of short stories that explain your conviction about the firm’s future.
o How to articulate your investment thesis? Describe 2 or 3 of the most significant factors affecting your firm’s value in 4 slides or less:
§ Investment thesis factor 1 … Investment thesis factor 2 … Investment thesis factor 3 …
§ Each factor begins with a “headline statement” that describes the main part of your firm’s business model most affected by the current macro environment, industry- and company-specific situation. These are the headwinds / tailwinds driving the firm’s value.
§ The more specifically you identify the part of the business affected by these factors the better. General factors applicable to all companies is a poor investment thesis. Avoid these!
§ You may provide charts or tables of analysis to back up the explanation of each factor.
o Important clarification: Your team’s investment thesis may change by the time you submit the 2nd deliverable. So don’t worry if your investment thesis is evolving. Present what it is now.
o More Explanations. Watch this video here that explains the investment thesis development.
o An Exemplar: Click here to watch a video presentation of one the best teams and their investment thesis on Procter & Gamble. Note an important difference between what this team has done and what is expected of you now: The Procter & Gamble video shows both the 1st and 2nd deliverable of this team assignment together. You, however, are only required do the 1st deliverable. Click here to see the Procter & Gamble team’s PowerPoint and Excel model.
· How many slides are there in the PowerPoint? 9 slides maximum. Slide 1: tutorial section code, tutor’s name, team number, company name, team member details including zIDs, and professional photos; Slides 2-4: Part A. Overview Report; Slides 5-8: Part B. Preliminary Investment Thesis; Slide 9: 1 extra slide for FINS2615 Intermediate Business Finance Term 2, 2024C/C++ any important and relevant information in any of the Parts.
· Help recording the video
o You are required to submit a link to a video (not the video file itself). To do so, create the video on any recording platform. you wish. However, based on my experience and much trial and error, Zoom and your UNSW OneDrive get the best results for Moodle. A step-by-step process is found in this link.
o There are two problems to be aware of to avoid losing marks:
1. Avoid submitting a link that no one can access. After creating the video, store the video file in your UNSW OneDrive and create a link to the video ensuring you give permission to anyone with the link – if you don’t give correct permission, no one can watch it and you will lose marks. Ensure that the link to the video works for anyone with the link by trying it on another web browser with no relation to your UNSW account, e.g., an incognito browser. If the link to your video does not work, you will lose marks!
2. Avoid your talking faces covering the PowerPoint slides. All the faces of your team members must appear in the video but at the side or above the PowerPoint slides. Your faces cannot cover the PowerPoint slides. If they do, you will lose marks. Avoid losing marks by following this link.
· Grading criteria
o 3% for overview analysis of company, industry, and macro environment
o 4% for preliminary investment thesis and link with the overview analysis
o 2% for quality of PowerPoint presentation
o 1% for professionalism in the video
· This is the end of the First Deliverable
In the Tutorials of Weeks 7, 8, and 9, 10-15 minutes will be dedicated for teams to informally present either their 1st deliverable video preliminary investment thesis or their most current investment thesis and the numerical assumptions they will use in their financial model. The tutor will provide immediate informal verbal feedback on what they present and remind other teams of what to watch out for. Tutorial Contribution grades are given for these presentations. Tutors will provide support to help teams develop their financial model assumptions.
Second Deliverable worth 20% is due by 11:55 PM on Sunday of Week 9. (28 July)
· Submit and present a FINAL INVESTMENT THESIS & VALUATION
Submit to Moodle by the deadline (1) a PowerPoint with 12 slides or less (in PDF format) and (2) an Excel financial model. Then present live at the Week 10 tutorial using the submitted PowerPoint and Excel.
· Part A (already done in 1st Deliverable)
· Part B (2-minute live presentation): FINAL INVESTMENT THESIS
o Provide up to 3 slides of your final investment thesis that will be used in a 2-minute live presentation. This should be similar to Part B of the 1st Deliverable but shorter because you have refined it.
· Part C (4-minute live presentation): FINANCIAL MODELS AND VALUATION
o Provide up to 6 slides to be used in a 4-minute live presentation of your financial model and valuation. The purpose of the live presentation is to justify the assumptions used in the financial models by clearly explaining the logical link between the assumptions and the investment thesis. During the presentation, include the following:
o Present a valuation of your company’s stock using at least two valuation models including the Free Cash Flow (FCF) method and another method of your choice, e.g. multiples valuation or DDM. For each model, justify the numerical assumptions by showing a logical link to your investment thesis. Watch this video summarizing different valuation methods.
o Present and interpret the valuations in a football field analysis including a comparison with the current stock price. Watch this video on how to build a football field analysis.
o For the FCF valuation, do a sensitivity analysis of the WACC and growth like this video.
o Present WACC / discount rate calculations and assumptions used in the FCF valuation. An illustrative real example that students can follow is Appendix 5 – Discount Rate on page 181 of 247 of the PDF document found here. Try to build a table like the Selected WACC Parameters for Estia Health.
o For extra marks, present bull/base/bear case models for your revenues or costs, also called “scenario analysis”. See this website at the Corporate Finance Institute for more details.
o For more help on financial models and valuation, see the Moodle site folder “Team Assignment – Help and Hints”. Available there is also information on free/discounted courses in financial modelling.
· Part D (1-minute live presentation): CONCLUDING BUY/SELL RECOMMENDATION
· How many slides are there in the PowerPoint? 12 slides maximum. Slide 1: tutorial section code, tutor’s name, team number, company name, team member details including zIDs, and professional photos; Slides 2-4 Part B. Final Investment Thesis; Slides 5-10: Part C. Financial valuation assumptions and explanation; Slide 11: Part D. Concluding buy/sell recommendation. Slide 12: 1 extra slide for any relevant information used in any of the parts.
· Grading criteria:
o 4% for final investment thesis – does it make sense?
o 4% for technical correctness using financial models – were the financial models used correctly?
o 4% for numerical assumptions that tie the investment thesis and financial models – is there a clear logical link between the assumptions of financial models and the investment thesis?
o 4% for teamwork in Q&A – do team members help each other answering questions?
o 4% for quality of presentation in PPT & Excel – professionalism of delivery
o Important: There is no correct answer! Each team will have different answers for the same company. Grades depend on the view of your investment thesis and implementation of the financial models
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