Reece Limited (ASX Code: REH)

• Suggested structure for the pitch:

The purpose of an investment pitch is to recommend a potential investment into a stock. It outlines a position for an investor to take in the stock (buy, sell or hold) and explain the reasons underpinning the recommendation. The following is the suggested structure for the pitch:

1. Executive Summary:
   • Recommendation: Buy/Sell/Hold
   • The target price for the stock
   • A brief summary of why you are making this recommendation.
2. Company Overview:
   • Provide a short description of the business, their key products and services,

activities, and how the company generates revenue and profit.

• Describe the position of the company in the market and its competitive advantage. Why would customers choose the company's products/services over those of their

competitors?

• Provide an overview of its financial highlights, capital structure and any other

prominent aspects of the firm.

1. Describe any significant recent events or changes in the company (if any)
2. Investment Thesis:
   • Explain why you are proposing either a buy, sell, or hold recommendation
   • Normally state three reasons as to why the stock is not currently properly priced

(why the market is wrong)

1. Catalysts:

Describe the possible events that could help the market to correct the price of the stock. Key events could be earnings releases, M&A activities, new product launches, etc.

5.valuation:

• Present the models that you apply to determine the value of the stock and explain

the key assumptions underlying the model.

• Potential models: Dividend Discount Model. You may use one of the three

assumptions about dividend growth rate, i.e., zero growth, constant growth, or mixed growth model. You must present evidence that supports your assumption. You may use the CAPM model to estimate the cost of shares. You may use the Australian stock market return as a measure of market return and the yield on Australian government bonds to measure the risk-free rate of return. Stock beta can be obtained from a database such as Data Analysis Premium.

For a "Buy" recommendation, the stock isundervaluedaccording to your model. For example, if the stock is valued at $35 (according to the model) and it is currently trading at $25 in the market, the stock is undervalued. A "hold" recommendation is made for investors who currently own the stock, and your valuation is higher than the market price. If your valuation is less than the market price, a sell recommendation is made.

6.Investment Risks: Describe the potential events that could cause your thesis to be wrong. Examples of

investment risks: product risk (product is not up to expectation), regulatory risk (unfavorable laws and regulations), etc.

Recommended Resources:

Company's annual reports

Bloomberg Terminals (DWB Finance Trading room)

http://asx.com.au (Australian stock exchange)

http://rba.gov.au (Reserve Bank of Australia)