FINS2615 Intermediate Business Finance Term 2 2024SPSS

Java Python TEAM ASSIGNMENT GUIDE

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 ateam 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 theTeam Contractand 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’sfuture.

o  How to articulate your investment thesis? Describe 2 or 3 of the most significant factors affecting your firm’svalue 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’svalue.

    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. Watchthis video herethat explains the investment thesis development.

o  An Exemplar:Click hereto 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: References of all information

sources, plus any important and relevant information in any of the Parts. You may add “Title slides” that don’t count as part of the 9-slide maximum,e.g., title slides “Overview Report”, “Preliminary Investment Thesis” .

•     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 inthis link.

o  There are two problems to be aware of to avoid losing marks:

1.   Avoid submitting a link that noone 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, noone 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 followingthis link.

•     Grading criteria - See end of this document for the detailed marking criteria and rubric

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

FINS2615 Intermediate Business Finance Term 2, 2024SPSS

clearly explaining the logical link between the assumptions and the investment thesis. During the presentation, include the following:

o  Present a forecast revenue model that is more detailed than a pure percentage sales model, including the numerical assumptions showing a logical link to your investment thesis.

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 thisvideosummarizing different valuation methods.

o  Present and interpret the valuations in a football field analysis including a comparison with the current stock price. Watch thisvideoon how to build a football field analysis.

o  For the FCF valuation, do a sensitivity analysis of the WACC and growth like thisvideo.

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

documentfound here. Try to build a table like the Selected WACC Parameters forEstia Health.

o  For extra marks, present bull/base/bear case models for your revenues or costs, also called “scenario analysis” . Seethis websiteat 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: References of all information sources, plus any relevant information.

•     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.

In the tutorial of Week 10, each team will have 13 minutes to present their 7-minute live presentation + answer 5

minutes of clarification questions by your tutor (the tutor may also invite a question from the class) + 1 minute

turnaround for the next team. At the end of the tutorial, the tutor gives 10 minutes of general feedback to all teams.

•     This is the end of the Second Deliverable

Detailed Marking Rubric for First Deliverable [weight: 10%]

[3%] Overview analysis of company, industry, and macro environment. The analysis provides an informed investor sufficient information that clearly explains the

situation of the company, industry, and macro environment, including where useful the business model, main products and services, size, main sources of revenue, SWOT, Porter, PESTLE analysis. However, only relevant and necessary analysis is provided because it helps the investment thesis instead of filling space.

•     Marking Criteria: Sufficient information; Clearly Explained Analysis; Useful, Relevant and Necessary Analysis.

•     Marking Grades: Excellent; Good; Acceptable; Unacceptable

[4%] Preliminary investment thesis and link with the overview analysis. The investment thesis provides an informed investor with convincing explanations of factors driving the value of the stock and is linked to the Overview Analysis. In doing so, it identifies significant macro or industry tail/headwinds (i.e. value creation

opportunities/risks) and company capabilities (i.e. value capture capabilities) to capture the opportunities or avoid the risks.

•     Marking Criteria: Convincing explanations; Coherent link with Overview; Identifies significant factors for value creation and value capture

•     Marking Grades: Excellent; Good; Acceptable; Unacceptable

[2%] Quality of PowerPoint presentation. The PowerPoint uses visual elements (e.g., colours, fonts, tables, diagrams, etc) that make it look professional. It should be   free of spelling or grammatical errors. The first slide has the tutorial/ tutor details, company name, team number, team member details, zIDs, professional photo. The last slide contains references and information sources.

•     Marking Criteria (Marking Grades): Visual (Excellent; Good; Acceptable; Unacceptable); Error free (None, 1-2, 3+); References (Yes/no)

[1%] Professionalism in the video. The link to the video works. The presenters’ faces do not cover the slides. Presenters well dressed. Presenters speak normally.

•     Marking Criteria (Marking Grades): Link (good/doesn’t work); Faces (good/ cover slides); Dress and speech (Professional/ not professional)

[10%] Criteria / Score	[3%] Overview analysis of company, industry, and macro	[4%] Preliminary investment thesis and link with the overview	[2%] Quality of PowerPoint presentation	[1%] Professionalism in the video
100	3 criteria are Excellent	3 criteria are Excellent	Visual: Excel; Error free; Ref	100: 3 criteria all Good
85-99	2 x Excellent; 1 x Good	2 x Excellent; 1 x Good	Visual: Good; Error free; Ref
75-84	1 x Excellent; 2 x Good	1 x Excellent; 2 x Good	Visual: Good; 1-2 Errors; Ref	75: Link/Face good; D&S: not prof
65-74	3 x Good	3 x Good	Visual: Accept; 1-2 Errors; Ref
50-64	3 x Acceptable	3 x Acceptable	Visual: Accept; 3+ Errors; No Ref	50: Link ok; Faces cover slides
10-49	1 or 2 Unacceptable	1 or 2 Unacceptable	Visual: Unacceptable
0-9	3 Unacceptable / Not provided	3 Unacceptable/ Not provided	Not provided	0: Link does not work

*Tutors’ discretion to score within each of the 7 bands above