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equity review 3 - Coggle Diagram
equity review 3
introduction to industry and
company analysis(R40)
为什么做行业分析？
understwanding a company's business and business environment
identifying investment opportunities
portfolio performance attribution
top down vs bottom up
top down approach
bottom up approach
industry life cycle
embryonic stage
slow growth
high cost
high product price
required large start up investment
high risk
unprofitable at first
growth stage
rapidly increasing demand
consistently expanding sales and earnings
limited competition
falling price
growth in profitablity
increased custumer awareness
low cost of production
shakeout stage
slowed growth, g>0
intensive competition
declining profitablity
over capacity
mature stage
little or no growth, g=0
stable market share
high barriers to entry
consolidation
decline stage
negative growth, g<0
declined demand
large cash flow
low profit
growth industries
building customer loyalty
building scale
reinvest their cash flow in new products
mature industries
replacement demand
extending successful product lines
no need to invest in new product
other factors affect industry growth
social
macroeconomic
demographic
political
行业分类
product and service they offer
sensitivity to business cycle
cyclical firm
high earnings volatility
high fixed cost
examples: energy, financial service, housing, autos, luxury
non-cyclical firm
defensive industries
growth industries
examples: health care, utilities, basic grocery
statistical data
based on the correlations
of past return
peer group
通过MD&A了解某个公司的peer group
查询commerical classification system
industry trade publication
做行业分类的2种机构
government (SEC)
public and private
profit and non-profit
slow update
证监会定义分类要求
business
public and profit
quick update
按照index分类
透明度高
pricing power
barriers of entry
concertation
under-capacity
market share stability
patent
lead time
high switching cost
price sensitivity
porter's five force
rivalry among existing competitors
threat of new entrants
threat of substitute products
bargaining power of buyers
bargaining power of suppliers
3 generic competitive strategies
cost leadership
differentiation
focus
equity valuation:concept and basic tool (R41)
payment chronology
declaration date
ex-dividend date
holder of record date
payment date
dividend type
cash dividend
regular dividend
special dividend
liquidating dividend
stock dividend
share repurchase
discounted fash flow model
price of prefer share
price of common share
gordon growth model (GGM)
assumption for GGM
firm expects to pay dividend
dividends will grow at constant rate (g)
growth rate is less than required rate
challenges
non-dividend stock
use FCEE
formula
unstable growth
use multi-stage model
2 stage model
unknown growth rate
formula
unknown required rate
formula
price multiple model
leading P/E
Trailing P/E
advantages
easy to calculate
use cross sectional or time series analysis
disadvantages
different fundamental calculations will have different result
accounting method不同是，失去参考意义
在cyclical firm波动会很大程度上受到经济情况的影响
lagging indicators, indicate past performance
denominators are easily negative
enterprise value
not equal to equity market value
EV/EBITDA
advantage
EBITDA不受负债的影响
not influenced by tax difference
not influenced by depreciation, and fixed capital
EBITDA不是负数
接近CFO
disadvantage
market value of debt is not available
use MV of similar debt or BV of debt
short term debt
MV=BV
long term debt
MV 约等于BV
asset based model
when to use
financial
natrual resources
liquidated company
valuation of private companies
advantages
offered a nminimum value
reliable when the firm has high portion of tangible assets adn current assets
disadvantages
not suitable with assets that do not have easily determinable market values
not suitable with asset and liability whose fair values can be different than book values
not suitable with intangible assets
not suitable in a hyper-inflationary environment