Final Project: Corporate Finance Analysis of a Saudi Listed Company i preferr to chose one of this two companies that easy to you (seera, al habib hospital)
Objective:
To apply theoretical finance concepts to real-world corporate analysis, enabling students to assess financial strategies, risk management, and investment decision-making skills using actual financial data from a Saudi listed company.
Instructions:
1. Choose a Company: Each student selects one company from the TADAWUL stock market. i prefer to chose
Seera
2. Data Collection:
– Financial Reports: Obtain recent annual and quarterly financial reports from the company’s official website or financial market databases.
– Market Data: Use TADAWUL to gather historical price data.
– Beta Value: Retrieve the company’s beta from Yahoo Finance.
– Risk-Free Rate: Search for current risk-free rate data applicable to Saudi Arabia (usually government bond yields).
3. Analysis Tasks:
– Capital Structure Analysis:
– Explain the concept of capital structure.
– Calculate the proportion of debt vs. equity in the company’s capital structure.
– Calculate the cost of debt from financial reports.
– Equity Required Rate of Return:
– Apply the Dividend Growth Model (DGM) and the Capital Asset Pricing Model (CAPM) to calculate the required rate of return on equity.
– Describe each model and show detailed calculations.
– Market Return Calculation:
– Use historical prices from TADAWUL to calculate the market return.
– Explain how this figure is used in the CAPM.
– Beta Utilization in CAPM:
– Describe what beta represents and how it influences the CAPM.
– Use the company’s beta from Yahoo Finance in the CAPM formula to calculate the expected return of the stock.
– Risk-Free Rate Utilization in CAPM:
– Explain the role of the risk-free rate in the CAPM.
– Show how to incorporate it into your calculations.
– Earnings and Dividend Growth Analysis:
– Use financial reports to calculate earnings growth.
– Find the Compound Annual Growth Rate (CAGR) of earnings or dividends.
– Apply these growth rates in the DGM.
– Stock Valuation and Analysis:
– Evaluate the company’s stock using both the CAPM and DGM.
– Compare the calculated intrinsic value with the current market price to determine if the stock is overvalued or undervalued.
4. Report Format:
– Introduction: Brief introduction of the chosen company and an overview of its industry.
– Methodology: Description of data sources and calculation methods.
– Analysis: Detailed presentation of calculations and results.
– Conclusion: Insights and implications of the analysis for potential investors.
– References: List of all data sources used.
5. Submission Guidelines:
– Format: PDF or Word Document.
– Length: 5-10 pages, including charts and tables.
