APPLIED SECURITY ANALYSIS AND VALUATION WORKSHOP
2014/2015, Semester 1
School of Business (Finance)
Modular Credits: 2
Investment Banking,Investment Management
This is a practical workshop where the emphasis is on application of corporate finance fundamentals. The focus is on “learning by doing”. The course will use numerous proprietary and contemporary case studies based on lectures experiences and situations to distill out current market practices. It will prepare students for a career in investment management, investment banking and corporate finance. The module aims to do the following - To provide students with different security valuation approaches and their relative merits - To introduce students to security valuation for different kinds of businesses and for differing stakeholder objectives. - To provide a framework for assessing risks and interpreting the market.
BMA 5008 and BMA 5302
This course is on equity valuation. As there are many methods to value equities, this course will discuss which methodology works under what conditions and why? Some of the methods are well established and others are relatively new. The course will evaluate a portfolio of approaches to come up with a consistent approach to valuation. Besides valuing equities the course will also cover what we can learn from prevailing prices?
It is a practical course where the emphasis is on application to real life situations. The focus is on “learning by doing”. The course will use numerous contemporary examples and many different techniques to value equities. Each class will have a different situation, which is live or near-live. These would allow students to appreciate current market practices and prepare them for a career in investment management, investment banking and corporate finance.
The module aims to do the following:
To provide students with different security valuation approaches and their relative merits
To introduce students to security valuation for different kinds of businesses and for differing stakeholder objectives.
To provide a framework for assessing risks and interpreting market price
In the first session there would be a discussioon on various valuation approaches. Thereafter in each of the remaining sessions, students will have an opportunity to apply these approaches to different situations and learn the challenges faced in the real world.
Making sense of the valuation alphabet soup
Intrinsic Value – DCF, DDM, EVA
Relative Valuation – P/E, P/BV, P/Revenue, EV/EBITDA - Relative to history, Relative to peers
What are the strengths and weaknesses of each valuation methodology?
Extracting key drivers of value
Industry structure, Comparative advantage, Key success factors, S-curves
Framework to dissect the business
Modelling, Forecasting versus Hypothesis
Learning about implicit and explicit biases and methodology for isolating potential bias
Valuing a growth business
Valuation of a Stable Growth Business
Valuation of a High Growth Business
Valuing a cyclical business
Recognition of cycle
Techniques to predict a cycle
Valuing the cycle
What is in the price? Deriving fundamentals from price
Price versus Value – Explaining divergence and exploiting the gap
Sensitivity versus scenarios
Security pricing for an issuer
This course is a practical workshop to bridge the academic learning with the requirements of work in investment banking and investment management industry. The emphasis is on learning by doing. Hence, there is no end of the course test. Instead there would be individual and group assignments.
In financial markets its critical to be able to entertain differnt perspectives. Hence, each class session would involve active discussions and class participation is a critical element of the course.
The evaluation criterai shall be as follows:
Class Participation (Individual) 30%
Assignments (Individual) 40%
Group Case Presentation 30%
Workload Components : A-B-C-D-E
A: no. of lecture hours per week
B: no. of tutorial hours per week
C: no. of lab hours per week
D: no. of hours for projects, assignments, fieldwork etc per week
E: no. of hours for preparatory work by a student per week