Estimation of the company’s share price by discounted cash flow method (DCF of FCFF)

 Write an analysis/report of 1600 that consists of the elements presented in point I. The report should be the financial recommendation for one chosen in point 4 company.( The Project and the Report should be separated in 2 files. Like,1 file Project ,1 file report)

• Companies to choose (ticker and name):

Company

Exchange place

Symbol

IPO

Industry

Centrosolar Group, AG

Frankfurt

FWB: C3O

2005

Photovoltaics

Centrotherm Photovoltaics, AG

Frankfurt

FWB: CTN

2007

Photovoltaics

China Power New Energy

Hong Kong

SEHK: 735

1999

Wind, Hydro, Biomass

China Sunergy Co, LTD

New York City

NASDAQ: CSUN

2007

Photovoltaics

Clear Blue Technologies International Inc

TSX-V

TSX-V: CBLU

2018

Smart Off-Grid

Comtec Solar Systems Group Limited

Hong Kong

SEHK: 712

2009

Photovoltaics

Conergy, AG

Frankfurt

FWB: CGY

–

Photovoltaics

DayStar Technologies, INC

New York City

NASDAQ: DSTI

2004

Photovoltaics

DelSolar Co, LTD

Taiwan

GTSM: 3599

–

Photovoltaics

Dongfang Electric

Hong Kong

SEHK: 1072

1994

Wind

Enel Green Power S.p.A.

Milano

EGPW

2010

Renewables

EnerDynamic Hybrid Technologies Inc.

TSX-V

TSX-V: EHT

2014

Wind, Solar

Energiekontor, AG

Frankfurt

FWB: EKT

2000

Wind

Enlight Renewable Energy Ltd.

Tel Aviv

TASE: ENLT

–

Wind, Solar

Enphase Energy

New York City

NASDAQ: ENPH

2012

Photovoltaics, Solar

1) Assessment

The paper (report) will make up 100% of the coursework assignment. The following aspects will be taken into consideration:

• Application of theory and critical analysis
• Empirical analysis (statistical, econometric analysis is appreciated but not mandatory)
• Use of source materials (e.g. EUROSTAT, OECD statistics, World Bank statistics)
• Structure (see below)
• Spelling and grammar, academic style

Paper has to include (for selected company):

• Calculation of cost of (own) equity capital (CAPM or other model)
• Calculation of cost of borrowed capital
• Calculation of WACC (in the context of optimal capital structure of a business)
• Forecasts of revenues for next 5 coming years (in the context of contributions made by investment projects, mergers and acquisitions to corporate growth)
• Simplified forecasts of financial statements (balance, income statement, cash flow statement). “Simplified” means: you can present only most important and needed, in your opinion, fragments of balance, income statement. Forecast method that you can you in this point can be based on “ratio/proportion to” (e.g. percentage of sales method) analysis. E,g. if you observed that the ratio of sales/assets or ratio of sales/current asset or any other you need is more or less stable for historical data, you can use this historical ratio to produce forecast for calculation of future assets or current assets or any other part of the statement that you can need. Of course it is more welcome to produce more detailed analysis, but lack of it will not have negative effects.
• Forecast of the rate of growth of FCFF of the company (“g”) (in the context of corporate life cycle theory)
• Estimation of the company’s share price by discounted cash flow method (DCF of FCFF)
• Analysis of the sector in global (world) scale

Elements that report has to include:

• Rf- risk free rate (short and long term),
• Rm- rate of return from market index or risk premium (long term),
• B- beta parameter,
• Capital structure (short and long term)
• Forecasts of revenues (short and long term)
• Forecasts of investment projects (short and long term)

Should be calculated as (weigted) average of following methods:

• Expert method/ Delphi method – reports/recommendations of stock market analyst, sector reports, forecasts of finance expert e.g. A. Damodaran, forecasts of company’s executive board, forecasts of IMF, OECD, ECB, MF, WB
• Own calculations – “standard” methods of the calculations (regression, average of historical growth, fixed proportion of base value, e.g. revenues, assets), give the reasoning for assumptions and information of:
• Own calculations – non-standard methods (based on long term interest based on inflation targeting; usage of data of competitors or whole industry; data from national statistical offices, like: tendencies of consumption of particular goods, demographics trends, etc), give the reasoning for assumptions and information of:

– chosen period,

– sources,

– used equations

– chosen period,

– sources,

– used equations

• Project structure requirements

a. Project will be undertaken by 1student

b.The student need to deliver electronic copy of only his/her work (without bibliography) in the .doc file that is named: Surname_Name_IDnumber_ IFS. Hereinafter referred to as “individual electronic version”.

c. Student need to deliver whole report hereinafter referred to as “individual report” (with bibliography) in the .doc file that is named: ..

d. Paper should have following structure:

A. INTRODUCTION (about 10% of the essay):

(Your interpretation of the title, what issues you are exploring, the importance of the issues)

B. MAIN BODY (about 80% of the essay):

Has to include underlined headlines and structure:

Short characteristics of the company

Short characteristics of the sector

Calculation of cost of (own) equity capital (CAPM or other model)

Calculation of cost of borrowed capital

Calculation of WACC (in the context of optimal capital structure of a business)

Forecasts of revenues for next 5 coming years (in the context of contributions made by investment projects, mergers and acquisitions to corporate growth)

Simplified forecasts of financial statements (balance, income statement)

Forecast of the rate of growth of FCFF of the company (“g”) (in the context of corporate life cycle theory)

Estimation of the company’s share price by discounted cash flow method (DCF of FCFF)

Analysis of the sector

C. CONCLUSION (about 10% of the essay):

(summarize your ideas, enumerate significant conclusions, convince the audience that you conclusions are sound and linked to the topic)

D. Reference List

(use the Harvard Referencing System to list all the books, articles, materials you have referred to in your essay: AUTHOR (date) Title. Town; Publisher. Page numbers. Alphabetical order by author’s surname.)

This is my last exam very important

Just wanted to say,Requirements are very important