FIN30016 Management of Investment Portfolio – Group Assignment
You are asked to write a sell-side analyst report as a group of 2-3 students. One of the modules
on Canvas has resources that further help you to complete this group assignment.
Weight: 20% of total grade
Group formation: You can form assignment groups voluntarily on or before 4 September (end
of week 5). Please email all members’ names to jiananguo@swin.edu.au and your group will be
set up in Canvas. After 4 September, ungrouped students will be randomly allocated into groups
of 2 or 3. If you have been working with other students but missed the cut-off date (4 September),
please email all members’ names to jiananguo@swin.edu.au titled ‘FIN30016 Group Member
Change’ by 11 September. After that, all assignment groups will be ‘crystalised’.
Due dates: Check on Canvas. You must submit your report, in word or PDF format, along
with the Excel worksheet, electronically using the assignment submission link on Canvas.
Late submissions: Late assignments cannot be accepted unless a time extension has been
requested from, and approved by, the Unit Convenor. Such requests must be made in writing
via email before the due date. You will be penalized 10% of the assessment’s worth for each
calendar day the task is late, up to a maximum of 5 days. After 5 calendar days, a zero result
will be recorded.
Format: This assignment must be written in a sell-side analyst report format. The resources on
group assignment on Modules of Canvas have some examples. This report would be within
2,000 words or no more than 8 pages excluding references and appendices. You can submit
both Word/PDF and Excel files.
Question
You are in the sell-side analyst team working for a brokerage firm. The firm has asked your
team to prepare a sell-side analyst report for the clients of the firm. The report is produced to
help guide investment decisions. Sell-side analysts issue the often-heard recommendations of
‘buy’, ‘hold’, or ‘sell’ to help clients with their investment decisions.
The company you are asked to analyze in the report is OZ Mineral Ltd. (OZL.AX), a miner
headquartered in South Australia which primarily explores for copper, gold, silver, nickel, iron
oxide, zinc, and lead deposits.
Your analyst report should address the following requirements (A-C).
Part A – Qualitative Analysis
Using economic, industry and firm-based analysis, estimate the potential and growth of the
sector as well as OZL.AX. Are they able to achieve growth under the current economic climate?
Part B – Quantitative Analysis
1. Provide a brief comment on the dividend policy of the firm.
2. Estimate the value (per share) of the company using the Free-Cash-Flow-to-Equity (FCFE)
method.
Part C – Conclusion/Recommendation
You are required to make recommendation if your clients should either BUY/ SELL/ HOLD/.
Using your findings from part (A) and (B), provide some justifications to your
recommendations.
Some general advice
1. It is not about getting the most accurate estimate. There is no one price otherwise the
market price for all the companies will be static. It is about how you ‘cook’ your ‘story’.
State your assumptions and cite your references.
2. Part A, instead of merely stating facts about the economy, industry, and the firm, provide
some analysis. Make a judgement call on how these facts will affect the company’s
operation, profitability and, most important of all, growth and cashflows.
3. Part B (i), you are only required to look up dividend paid by firm over the last 5 years. It
is also a good exercise using the dividend discount model to investigate the multiples over
the last few years. Apply your knowledge from FIN20014 on dividend policy.
4. Part B (ii), you are only required to look up FCFE for the firm over the last five years.
The biggest challenge is finding the appropriate discount rate. Revise FIN20014 on the
relevant topics early (i.e., risk-based models such as Capital Asset Pricing/Market models).
5. You should state your outlook horizon (2 or 3 or 5 years) in your justifications. Use the
most recent financials available. When estimating your growth, you are only expected to
use up to 5-year worth of historical data.
6. Some good starting points. For issues on applying FCFE, look up the group assignment
resources on Canvas. You have learned about DCF approach in valuation from FIN20014.
Topic 9 in this unit further discusses equity valuation. You may also wish to search
Aswath Damodaran for his books or his website. Use DatAnalysis from Swinburne
Library for financial data on the company. You may also wish to use Yahoo! Finance for
this purpose.