Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
XAs an investment advisor with a major stockbroking company, you are now examining AirAsia stock and its valuation. You wondered whether to recommend the stock to one of your clients who did not currently have AirAsia in his portfolio. In determining whether AirAsia shares are fairly valued, you decided to focus on three valuation methods you had learnt, i.e. constant growth model, non-constant growth model and market multiple analysis.Brief Background of AirAsia Bhd.Based in Malaysia and founded by Tony Fernandes, AirAsia was named as the World’s Best Low-Cost Airline for five consecutive years (2009-2013). The company’s strategy is to provide low fares in line with its famous tagline of “Now Everyone Can Fly”. AirAsia presently operates with 150 aircrafts (Airbus A320) and has in the pipeline 200 new A320neo aircrafts with Airbus. The airline covers over 80 destinations via 160 routes crisscrossing 18 countries and has carried over 200 million guests since 2002. During the fiscal year ended December, 31, 2013, AirAsia’s net profits were RM362 million on the back of RM5.1 billion in revenue.AirAsia became a publicly traded firm in 2004 with an initial stock price of RM1.25 and only paid its first cash dividend of RM0.03 in 2010 (why?). Analysts are generally upbeat with AirAsia’s future performance. As of June 2014, according to Thomson Reuters, AirAsia shares were ranked as “buys” in the coming months by 17 analysts, “holds” by 8 analysts and only one analyst recommended “sells”. Analysts’ consensus target price was RM2.80, relative to its closing price of RM2.33 on 16 June 2014. AirAsia’s 52-week high stock price was RM3.32 and the 52-week low was 2.18 per share.Tasks 1. Calculate AirAsia’s required return using CAPM approach.2. Determine AirAsia’s constant growth rate using historical growth rate and earnings retention model.3. Calculate AirAsia’s intrinsic value using constant growth, non-constant growth and price/earnings multiple approaches.4. What is your assessment of AirAsia’s stock price of RM2.33 as of 16 June 2014? Is the stock fairly, under or overvalued? 5. Based on your analysis in (4) above, what recommendation would you make to your client?AssessmentYou are required to produce a REPORT. You will not get good grades by merely presenting the numbers with little elaboration of methods and assumptions behind the answers.Exhibit 1: FTSE Bursa Malaysia KLCI Index between 1993 and 2013Year AirAsia EPS AirAsia Payout ratio KLCI Index1993 736.511994 1032.391995 1064.591996 1125.481997 1077.41998 435.841999 791.912000 836.192001 589.422002 748.512003 683.272004 818.162005 0.09 0 898.042006 0.03 0 893.52007 0.14 0 1360.652008 0.33 0 1238.062009 0 0 1074.122010 0.21 0.07 1303.132011 0.36 0.19 1554.242012 0.21 0.09 1579.232013 0.64 0.31 1762.19Assumption: long-term government bond rate = 3.0%
The common stock obtained upon conversion is selling for $54 per share. What is the convertible bonds conversion premium?
First Century Bank wants to earn an effective annual return on its consumer loans of 10 percent per year. The bank uses daily compounding on its loans. By law, what interest rate is the bank required to report to potential borrowers?
karen wants to compare using the cost plus method to the percentage markup method. if she sells 2 small rice pads 4
Donut Delite has total assets of $31,300, long-term debt of $8,600, net fixed assets of $19,300, and owners' equity of $21,100. What is the value of the net working capital?
Calculate the present value of a lump sum payment
Calculate the dollar cost of each of the proposed plans for obtaining an initial loan amount of $100,000.
Jeff's parents will like to save for their two year son to go to college. They anticipate that will cost a total of $60,000 for 4 years when Jeff turns 20.
He has been offered $25,778,500 to sell his ticket. What rate of return is the buyer expecting to make if Andy accepts the offer?
Rachel Avery, accounting clerk in the personnel office of Clarence G. Avery Corporation, has begun to calculate pension cost for 2004 but is not sure whether or not she should include the amortization of unrecognized gains or losses.
question 1. prepare the pro forma cash flow statements for bloomington clinics for five years into the future using the
A poorly diversified portfolio has a standard deviation of 20%. What can you say about its beta?
Candy Corporation had pretax profits of $1.2 million, an average tax rate of 34 percent, and it paid preferred stock dividends of $50,000. There were 100,000 shares outstanding and no interest expense. What were Candy Corporation's earnings per sh..
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd