(a) Appraise whether the dividend valuation, FCFF discounted cash flow, or FCFE discounted cash flow method is the most appropriate valuation method to value to share price of the chosen company - Grab.

 

(b) Compute the cost of capital. You must provide your data source and show all workings in the report appendix.

 

(c) Value the company's shares using the choice of valuation method in Question (a) and the cost of capital computed in Question (b). You will also need to calculate the cash flows used in the valuation (dividends, FCFF, or FCFE).
Assign an appropriate rating to the stock based on the in-house rating system below. Returns are on an absolute basis.
 

BUY - The share price may exceed 10% over the next 12 months
HOLD - The share price may fall within the range of +/- 10% over the next 12 months
SELL - The share price may fall by more than 10% over the next 12 months
Organise your analysis and present your recommendation in a professional research report. Include an executive summary containing critical data on the company, the investment thesis, target price, investment horizon, and target total return. Briefly explain your choice of valuation method. Briefly justify the parameters used in your valuation, e.g., growth stages, duration, growth rate, etc. Include the pertinent points of your answers in Question 1 in the Report. All detailed calculations are to be shown in the Appendix.

        

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Consolidated statement of financial position As at December 31 (in $ millions) Non-current assets Property, plant and equipment Intangible assets and goodwill Associates and joint venture Deferred tax assets Other investments Prepayments and other assets Current assets Inventories Trade and other receivables Prepayments and other assets Other investments Cash and cash equivalents Total assets Equity Share capital and share premium Reserves Accumulated losses Equity/(deficit) attributable to owners of the Company Non-controlling interests Total equity/(deficit) Non-current liabilities Convertible redeemable preference shares Warrant liabilities Loans and borrowings Provisions Trade and other payables Deferred tax liabilities Current liabilities Loans and borrowings Provisions Trade and other payables Current tax liabilities Total liabilities Total equity/(deficit) and liabilities Amountless than $1 million Note 56 17(iii) 779 9 8970 11 11(ii) 12 11(ii) 13. BH 15 16 17 14 17(iii) 456 2021 S 441 675 14 5 1,241 127 2,503 4 255 185 3,240 4,991 8,675 11,178 21,529 606 - 54 2,031 18 27 3 2,133 144 35 844 3 2020 S 140 3,951 (14,402) (10,490) 7,733 (6,399) 286 105 8,019 (6,294) 1,026 3,159 11,178 384 913 9 377 1,687 3 172 109 1,298 2,173 3,755 5,442 10,767 111 3 18 1 10,900 140 35 661 836 11,736 5,442 Consolidated statement of financial position As at December 31 (in $ millions) Non-current assets Property, plant and equipment Intangible assets and goodwill Associates and joint venture Deferred tax assets Other investments Prepayments and other assets Current assets Inventories Trade and other receivables Prepayments and other assets Other investments Cash and cash equivalents Total assets Equity Share capital and share premium Reserves Accumulated losses Equity/(deficit) attributable to owners of the Company Non-controlling interests Total equity/(deficit) Non-current liabilities Convertible redeemable preference shares Warrant liabilities Loans and borrowings Provisions Trade and other payables Deferred tax liabilities Current liabilities Loans and borrowings Provisions Trade and other payables Current tax liabilities Total liabilities Total equity/(deficit) and liabilities Amountless than $1 million Note 56 17(iii) 779 9 8970 11 11(ii) 12 11(ii) 13. BH 15 16 17 14 17(iii) 456 2021 S 441 675 14 5 1,241 127 2,503 4 255 185 3,240 4,991 8,675 11,178 21,529 606 - 54 2,031 18 27 3 2,133 144 35 844 3 2020 S 140 3,951 (14,402) (10,490) 7,733 (6,399) 286 105 8,019 (6,294) 1,026 3,159 11,178 384 913 9 377 1,687 3 172 109 1,298 2,173 3,755 5,442 10,767 111 3 18 1 10,900 140 35 661 836 11,736 5,442

Answer rating: 100% (QA)

Here are the detailed steps and calculations to value Grab using DCF methodology 1 Financial Forecas... View the full answer