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Writing Equity Report 11 February 2016 Introduction to Equity Report Writing NUS Invest nusinvest.com Ong Zi Hao | Yu Chen FA Department DISCLAIMER AND DISCLOSURES Please read the disclaimer and the disclosures which can be found within this report Writing Equity Report 11 February 2016 Why Write Equity Report? 1. Understand WHY you buy a stock NUS Invest nusinvest.com Ong Zi Hao | Yu Chen FA Department DISCLAIMER AND DISCLOSURES Please read the disclaimer and the disclosures which can be found within this report Writing Equity Report 11 February 2016 Why Write Equity Report? 2. Impress Interviewers NUS Invest nusinvest.com Ong Zi Hao | Yu Chen FA Department DISCLAIMER AND DISCLOSURES Please read the disclaimer and the disclosures which can be found within this report 3. Spoil bell curve in FIN2004 Writing Equity Report 11 February 2016 Why Write Equity Report? I. Understand why you buy II. Impress Interviewers III. A+ for FIN mods NUS Invest nusinvest.com Ong Zi Hao | Yu Chen FA Department DISCLAIMER AND DISCLOSURES Please read the disclaimer and the disclosures which can be found within this report Writing Equity Report 11 February 2016 How to write equity report? 1. Research 2. Basic information 3. Essentials of Equity Report 3.1 Company Overview 3.2 Industry Overview 3.3 Investment Thesis & Valuation 3.4 Investment Risks NUS Invest nusinvest.com Ong Zi Hao | Yu Chen FA Department DISCLAIMER AND DISCLOSURES Please read the disclaimer and the disclosures which can be found within this report Writing Equity Report 11 February 2016 How to write equity report? 1. Research Sources of Information 1. Company Website 2. Competitors’ Websites 3. Analysts’ Reports 4. Regulatory Bodies 5. Bloomberg/Reuters NUS Invest nusinvest.com Ong Zi Hao | Yu Chen FA Department DISCLAIMER AND DISCLOSURES Please read the disclaimer and the disclosures which can be found within this report Writing Equity Report 11 February 2016 How to write equity report? Where to find Bloomberg Terminals in NUS? Contact Us Centre for Asset Management Research & Investments (CAMRI) NUS Business School 15 Kent Ridge Drive Level 3, Mochtar Riady Building Singapore 119245 Tel: (65) 6516 4165 or (65) 6601 1047 Fax: (65) 6778 0390 Email: camri@nus.edu.sg NUS Invest nusinvest.com Ong Zi Hao | Yu Chen FA Department DISCLAIMER AND DISCLOSURES Please read the disclaimer and the disclosures which can be found within this report 2. Basic information 1. Company’s Name & Ticker 2. Current Trading Price 3. Market Capitalization 4. Recommended Price 5. Recommended action 6. Liquidity 7. Key Financials 8. Key Management Members Writing Equity Report 11 February 2016 How to write equity report? 3. Essentials of Equity Report 3.1 Company Overview NUS Invest nusinvest.com Ong Zi Hao | Yu Chen FA Department DISCLAIMER AND DISCLOSURES Please read the disclaimer and the disclosures which can be found within this report Writing Equity Report 11 February 2016 How to write equity report? 3. Essentials of Equity Report 3.1 Company Overview Business Nature Company’s product & Services NUS Invest nusinvest.com Ong Zi Hao | Yu Chen FA Department DISCLAIMER AND DISCLOSURES Please read the disclaimer and the disclosures which can be found within this report Writing Equity Report 11 February 2016 How to write equity report? 3. Essentials of Equity Report 3.2 Industry Overview Macro environment SWOT STEEP NUS Invest nusinvest.com Ong Zi Hao | Yu Chen FA Department DISCLAIMER AND DISCLOSURES Please read the disclaimer and the disclosures which can be found within this report Writing Equity Report 11 February 2016 How to write equity report? 3. Essentials of Equity Report 3.2 Industry Overview Micro environment High Competition within Industry • Oligopolistic High Threat of new entrants • Low technological requirement NUS Invest nusinvest.com Ong Zi Hao | Yu Chen FA Department DISCLAIMER AND DISCLOSURES Please read the disclaimer and the disclosures which can be found within this report Writing Equity Report 11 February 2016 How to write equity report? 3. Essentials of Equity Report 3.2 Industry Overview Micro environment Low Threat of substitutes • Gloves is just glove High Bargaining Power of Buyers • Many competitors to choose from Low Bargaining Power of Suppliers • Many Suppliers in the nearby region NUS Invest nusinvest.com Ong Zi Hao | Yu Chen FA Department DISCLAIMER AND DISCLOSURES Please read the disclaimer and the disclosures which can be found within this report Writing Equity Report 11 February 2016 How to write equity report? 3. Essentials of Equity Rep ort 3.3 Investment Thesis &Valuation NUS Invest nusinvest.com Ong Zi Hao | Yu Chen FA Department DISCLAIMER AND DISCLOSURES Please read the disclaimer and the disclosures which can be found within this report Writing Equity Report 11 February 2016 Investment Thesis 1. What is my opinion of this stoc k? 3 reasons why I want to buy/s ell (key drivers) NUS Invest nusinvest.com Ong Zi Hao | Yu Chen FA Department DISCLAIMER AND DISCLOSURES Please read the disclaimer and the disclosures which can be found within this report Writing Equity Report 11 February 2016 Investment Thesis Key Drivers Internal - Expansion Plans (new factory, new products) - Acquisitions - New customer contracts - Improving operational efficienc y NUS Invest nusinvest.com Ong Zi Hao | Yu Chen FA Department External - End market trends Consumer buying patterns Macroeconomic factors Legislative / regulatory changes DISCLAIMER AND DISCLOSURES Please read the disclaimer and the disclosures which can be found within this report Writing Equity Report 11 February 2016 Investment Thesis Example Riverstone Holdings Ltd 1. (internal) Expansion Plans: d ouble factory production capaci ty II. (external) Depreciating MYR favo urs rubber gloves exports III. (internal & external) near zero de bt; immune to interest rate increase NUS Invest nusinvest.com Ong Zi Hao | Yu Chen FA Department DISCLAIMER AND DISCLOSURES Please read the disclaimer and the disclosures which can be found within this report Writing Equity Report 11 February 2016 Investment Thesis 1. What is my opinion of this stoc k? 3 reasons why I want to buy/s ell (key drivers) NUS Invest nusinvest.com Ong Zi Hao | Yu Chen FA Department DISCLAIMER AND DISCLOSURES Please read the disclaimer and the disclosures which can be found within this report Writing Equity Report 11 February 2016 Investment Thesis & Valuation II. Why is the market wrong? Intrinsic value vs market price NUS Invest nusinvest.com Ong Zi Hao | Yu Chen FA Department DISCLAIMER AND DISCLOSURES Please read the disclaimer and the disclosures which can be found within this report Writing Equity Report 11 February 2016 Investment Thesis & Valuation Valuation Method s Relative Absolute Trading Comps - P/E - EV/EBITDA Discounted Cas hflow At least 2 method s! NUS Invest nusinvest.com Ong Zi Hao | Yu Chen FA Department DISCLAIMER AND DISCLOSURES Please read the disclaimer and the disclosures which can be found within this report Writing Equity Report 11 February 2016 Investment Thesis & Valuation Valuation Method s Relative Absolute Discounted Cas hflow FUTURE NUS Invest nusinvest.com Ong Zi Hao | Yu Chen FA Department Trading Comps - P/E - EV/EBITDA CURRENT MARKET CONDITIONS DISCLAIMER AND DISCLOSURES Please read the disclaimer and the disclosures which can be found within this report Writing Equity Report 11 February 2016 Investment Thesis & Valuation Valuation Method s Relative Absolute Discounted Cas hflow Trading Comps - P/E - EV/EBITDA Football Field Chart NUS Invest nusinvest.com Ong Zi Hao | Yu Chen FA Department DISCLAIMER AND DISCLOSURES Please read the disclaimer and the disclosures which can be found within this report Writing Equity Report 11 February 2016 Investment Thesis & Valuation DCF Output NUS Invest nusinvest.com Ong Zi Hao | Yu Chen FA Department DISCLAIMER AND DISCLOSURES Please read the disclaimer and the disclosures which can be found within this report Writing Equity Report 11 February 2016 Investment Thesis & Valuation DCF Output Range: $1.10- 1. 40 NUS Invest nusinvest.com Ong Zi Hao | Yu Chen FA Department DISCLAIMER AND DISCLOSURES Please read the disclaimer and the disclosures which can be found within this report Writing Equity Report 11 February 2016 Investment Thesis & Valuation Valuation Method s Relative Absolute Discounted Cas hflow Trading Comps - P/E - EV/EBITDA Football Field Chart NUS Invest nusinvest.com Ong Zi Hao | Yu Chen FA Department DISCLAIMER AND DISCLOSURES Please read the disclaimer and the disclosures which can be found within this report Writing Equity Report 11 February 2016 Investment Thesis & Valuation Trading Comp s - P/E - EV/EBITDA NUS Invest nusinvest.com Ong Zi Hao | Yu Chen FA Department DISCLAIMER AND DISCLOSURES Please read the disclaimer and the disclosures which can be found within this report Writing Equity Report 11 February 2016 Investment Thesis & Valuation Trading Comp s - P/E: $1.06 – 2.40 - EV/EBITDA: $1.06 – 2.19 NUS Invest nusinvest.com Ong Zi Hao | Yu Chen FA Department DISCLAIMER AND DISCLOSURES Please read the disclaimer and the disclosures which can be found within this report Writing Equity Report 11 February 2016 Investment Thesis & Valuation Valuation Method s Relative Absolute DCF: $1.10- 1.40 - P/E: $1.06 – 2.40 - EV/EBITDA: $1.06 – 2.19 Football Field Chart NUS Invest nusinvest.com Ong Zi Hao | Yu Chen FA Department DISCLAIMER AND DISCLOSURES Please read the disclaimer and the disclosures which can be found within this report Writing Equity Report 11 February 2016 Investment Thesis & Valuation Football Field Cha rt Range: $1.06 - $1. 40 NUS Invest nusinvest.com Ong Zi Hao | Yu Chen FA Department DISCLAIMER AND DISCLOSURES Please read the disclaimer and the disclosures which can be found within this report Writing Equity Report 11 February 2016 Investment Thesis & Valuation II. Why is the market wrong? Intrinsic value vs market price Range: $1.06 - $1. 40 Market Price: $1.0 6 BUY or HOLD? NUS Invest nusinvest.com Ong Zi Hao | Yu Chen FA Department DISCLAIMER AND DISCLOSURES Please read the disclaimer and the disclosures which can be found within this report Writing Equity Report 11 February 2016 Investment Thesis & Valuation Football Field Cha rt Range: $1.06 - $1. 40 NUS Invest nusinvest.com Ong Zi Hao | Yu Chen FA Department DISCLAIMER AND DISCLOSURES Please read the disclaimer and the disclosures which can be found within this report Writing Equity Report 11 February 2016 Investment Thesis & Valuation Personal Opinion BUY NUS Invest nusinvest.com Ong Zi Hao | Yu Chen FA Department DISCLAIMER AND DISCLOSURES Please read the disclaimer and the disclosures which can be found within this report Writing Equity Report 11 February 2016 Investment Thesis 1. What is my opinion of this stoc k? 3 reasons why I want to buy/s ell (key drivers) II. Why is the market wrong? Intrinsic value vs market price NUS Invest nusinvest.com Ong Zi Hao | Yu Chen FA Department DISCLAIMER AND DISCLOSURES Please read the disclaimer and the disclosures which can be found within this report Writing Equity Report 11 February 2016 Investment Thesis & Valuation 1. (internal) Expansion Plans: dou ble factory production capacity II. (external) Depreciating MYR favo urs rubber gloves exports III. (internal & external) near zero de bt; immune to interest rate increase NUS Invest nusinvest.com Ong Zi Hao | Yu Chen FA Department DISCLAIMER AND DISCLOSURES Please read the disclaimer and the disclosures which can be found within this report Writing Equity Report 11 February 2016 Investment Thesis & Valuation Range: $1.06 - $1. 40 Market Price: $1.0 6 Personal Opinion BUY NUS Invest nusinvest.com Ong Zi Hao | Yu Chen FA Department DISCLAIMER AND DISCLOSURES Please read the disclaimer and the disclosures which can be found within this report Writing Equity Report 11 February 2016 How to write equity report? 3. Essentials of Equity Rep ort 3.4 Investment Risks NUS Invest nusinvest.com Ong Zi Hao | Yu Chen FA Department DISCLAIMER AND DISCLOSURES Please read the disclaimer and the disclosures which can be found within this report Writing Equity Report 11 February 2016 Investment Risks Address negative industry and company develop ments that could pose a risk to investment thesis NUS Invest nusinvest.com Ong Zi Hao | Yu Chen FA Department DISCLAIMER AND DISCLOSURES Please read the disclaimer and the disclosures which can be found within this report Writing Equity Report 11 February 2016 Investment Risks Types Operational Financial Regulatory Macroeconomics Auditor’s Opinion NUS Invest nusinvest.com Ong Zi Hao | Yu Chen FA Department DISCLAIMER AND DISCLOSURES Please read the disclaimer and the disclosures which can be found within this report Writing Equity Report 11 February 2016 Investment Risks Example Types Macroeconomics – Commodity price fluctuation ( oil inputs for nitrile gloves) Regulatory – higher cost of running business in Mal aysia; VAT and wages NUS Invest nusinvest.com Ong Zi Hao | Yu Chen FA Department DISCLAIMER AND DISCLOSURES Please read the disclaimer and the disclosures which can be found within this report Writing Equity Report 11 February 2016 How to write equity report? 1. Research 2. Basic information 3. Essentials of Equity Report 3.1 Company Overview 3.2 Industry Overview 3.3 Investment Thesis & Valuation 3.4 Investment Risks NUS Invest nusinvest.com Ong Zi Hao | Yu Chen FA Department DISCLAIMER AND DISCLOSURES Please read the disclaimer and the disclosures which can be found within this report Writing Equity Report 11 February 2016 Conclusion Objective: Overview Want to learn how to do? Join F A! Contact: zihao@u.nus.edu wuyuchen@u.nus.edu NUS Invest nusinvest.com Ong Zi Hao | Yu Chen FA Department DISCLAIMER AND DISCLOSURES Please read the disclaimer and the disclosures which can be found within this report Introduction to FA 11th February 2016 Upcoming Workshops NUS Invest nusinvest.com Ong Zi Hao | Yu Chen FA Department DISCLAIMER AND DISCLOSURES Please read the disclaimer and the disclosures which can be found within this report
