Comments (2)

By Tai, July 15, 2010 12:10 am

Foster’s Group Limited Analysis and Valuation

Investment Decision Making Support

June 2010

Phuong Ho, Thanh Luong, Hanh Pham, Khoi Tran, Tai Tran, Huy Truong

Abstract

Valuation is the key activity for investment decisions. This document analyses Strategy, Accounting, and Financial conditions of Foster’s Group Limited within the context of the Australian Alcoholic Beverage Industry. The information is ultimately synthesized for Forecast and Valuation of the company. Time-series analysis is done for the 2007-2009 period with reference to the 2005-2006 period. Cross-sectional analysis puts Foster in contrast to its major competitor Lion Nathan. All information is from publicly available academic and reputable business sources.

On industry level, Foster is the largest player in a concentrated market. Foster can take advantage of the acquisition of Lion Nathan to move ahead in the competition. In terms of strategy, Foster is implementing various initiatives so as to maintain its position in Australasia and expand to the US and Asia. Accounting of the company is at high quality; however a concern of write-down is raised. On financial performance, Foster’s business is more fluctuating resulting from turbulence of its operations in the US market, compared to its opponent Lion Nathan. The volatility of earnings and growth may account for uncertainty of market perception toward the company and thus result in an undervaluation. Forecast of company sales growth ranges between 2.7% to 3.1% which is higher than industry value weighted average, and forecast of net operating profit margin is 18%. Valuation using three difference methods yields a fair price of AUD 5.85. We find the stock currently undervalued while the company has great prospects in long-term horizon, thus recommend Buy and Hold strategy. This recommendation receives analysts’ consensus.

To receive the document, please comment on this post with your real email (won’t be publicized).

Comments (4)

By Tai, April 10, 2009 7:34 pm

I’d suspected that Facebook is moving fast toward monetization.

But Sheryl Sandberg’s confirmation that Facebook has been profitable for 5 consecutive quarters still comes as a nice surprise.

Nevertheless, considering this model, where all the money has been generated is not much a question.

Where else has Facebook been making money on? Will Social Search come next? Will Facebook do Data Mining behind the scene?

Comments (0)

By Tai, March 7, 2009 9:54 am

My first fortnight in Sydney passed and the only social media entity I’m surrounded by is neither Google, Yahoo nor Twitter, but Facebook.

My experience with the University of New South Wales confirms my hypothesis on the Viralization of Facebook:

In UNSW we have over 100 clubs and societies. Student activities and career orientation programs here are organized make use of Facebook as a platform for announcements, discussions, networking and to some extent, information storage.

Newly arrived students are inevitably invited to create a Facebook account, connect to others and join many of the student groups.

Influencers are ubiquitous. And they’re not necessarily the tech-savvy; mainly, they have something to share.

Around 2,600,000 Australian are in Australian network, around 12% of the whole population of Australia.

A quick check on Alexa shows that Facebook is ranking 3rd in Australia, only after the two Google’s properties. Considering their popularity and potential to dominate the web further, I’m not surprised if Facebook wants to shift from relationship-centric to content-centric.