Subject Investment Analysis and Portfolio Ma

Class MBA II - Section A

Date 17th May 2021
Instructor Dr. Kumail Rizvi

Student Data
Name
Roll Number
Class
Date

Question Number Attempted (Yes/No)

Q1
Q2
Q3
Q4
0
Message You Should Attempt all Four Questions

Instructions
Be Honest with your working as I might take VIVA Exam for students on Random Basis and if I found
Be vigilant in providing calculations and USE FORMULAS wherever possible. Any calculation without
Do not remove your formulas as they will be used to verify the authenticity of your working.
sis and Portfolio Management

n Random Basis and if I found them not capable to defend their work on their Excel Sheets, I might suspect a use of Unfair Means.
ssible. Any calculation without using EXCEL Formula would not be acceptable.
ticity of your working.
e of Unfair Means.
Based on the given data of stocks that are included in KMI 30 Index, you are required to construct a Passive Por
Mimicks KMI 30. You have 6.5 Million PKR available for constructing your portfolio. You also assume that ther
cost involve including commission, taxes, fed etc. You have to show clearly, how much amount you would be allo
from your 6.5 Million and how many number of shares you would purchase to construct your passive portfolio.
is constructed, you need to prove also that the returns of KMI 30 and Returns your Your Portfolio (My PF)

International Security Ticker or Symbol of

Identification Number Stock in KSE 30 Company Name Stock Price Today (t)
ISIN SYMBOL COMPANY PRICE
PK0000501012 KEL K-Electric Limited. 3.69
PK0075001013 KOHC Kohat Cement Co. Ltd. 190.4
PK0071501016 LUCK Lucky Cement Limited. 878.41
Mari Petroleum Company
PK0066301018 MARI Ltd.(XD) 1503.38
Meezan Bank Limited.
PK0077401013 MEBL (XD) 108
Maple Leaf Cement
PK0066201010 MLCF Factory Ltd. 42.64
PK0009801017 MTL Millat Tractors Limited. 1069.36
PK0005501017 NML Nishat Mills Ltd. 86.13
Oil & Gas Development
PK0080201012 OGDC Company Ltd. 92.67
PK0034601010 PAEL Pak Elektron Ltd. 30.9
PK0010001011 PKGS Packages Ltd.(XD) 486.49

PK0023901017 POL Pakistan Oilfields Limited. 360.06

Pakistan Petroleum
PK0081801018 PPL Limited. 82.6

PK0022501016 PSO Pakistan State Oil Co Ltd. 221.69

PK0061701014 SEARL The Searle Company Ltd. 230.46

Abbott Laboratories Pak
PK0025701019 ABOT Ltd. 780.2

PK0024501014 ATRL Attock Refinery Limited. 222.15

PK0029801013 CHCC Cherat Cement Co. Ltd. 167.44
D. G. Khan Cement Co.
PK0052401012 DGKC Ltd. 111.07

PK0099701010 EFERT Engro Fertilizers Limited. 67.96

Engro Corporation
PK0012101017 ENGRO Limited. 302.53
Engro Polymer &
PK0092201018 EPCL Chemicals Ltd.(XD) 49.09
PK0074501013 FCCL Fauji Cement Co Ltd. 22.75
Glaxo SmithKline
PK0001301016 GLAXO Pakistan Ltd.(XD) 146.76
Honda Atlas Cars (Pak)
PK0064901017 HCAR Ltd. 297.6
PK0003101018 ICI ICI Pakistan Limited. 851.66
International Industries
PK0028501010 INIL Ltd. 197.25
International Steels
PK0102001010 ISL Limited. 80.67
Sui Northern Gas Pipe
PK0008901016 SNGP Line Ltd. 38.89
PK0068801015 UNITY Unity Foods Limited. 35.71
 equired to construct a Passive Portfolio that tracks or
ortfolio. You also assume that there is no transaction
ow much amount you would be allocated to each stock
o construct your passive portfolio. Once your portfolio
turns your Your Portfolio (My PF) are identical.

Stock price after a Free Float Based

week (t+1) Number of Shares
PRICE AFTER WEEK FF BASED SHARES
4.21 2761519425
206.96 60258389
877.54 113181250

1594.54 26680500

119.35 353680696

43.81 494255804
1063.12 28028876
86.50 158219932

80.46 645139260
34.97 248840743
563.08 22344876

407.84 129801502

80.00 666423613

224.13 211262985

250.73 108018237

814.56 21044371

228.57 42646500
167.79 116577023

109.37 219059559

74.69 600884719

318.86 316889777

46.64 318123167
 22.80 758898264

147.04 51896373

335.55 28560000
980.71 13853858

193.12 72535034

83.97 152250000

35.50 285397499
36.80 546727500
Rehan an equity analyst is interested in valuing the stock of Agritec Tractors and wants to use Relative Valuation
comparable company that can become the part of benchmark panel for the estimation of benchmark Price based
however, instead of using benchmark P/E based on appropriate comparable firms, Rehan must use Intrinisic or
Rehan asked Haris to collect the necessary input data to complete the assessment and Haris came up with some
equity investors as the usual practice of the company to retain only 15% of net income and distribute the rest am
and therefore its return on assets has been sluggish, on average 8%, for the last many years. To satisfy the equit
The positioning of Agritec tractor in stock market is pretty stable but slightly over reactive as reflected by its sys
Although the business model of Agritec Tractos is robust yet, Haris is of the view that not much of the equity inve
The rate on treasury bills is around 8% and expected to be in the same vicinity for some years, due to which man
equity markets is also rewarding and manage to offer risk premium of around 6% over and above the risk free r

Rehan and Haris decided to calculate the following estimates to complete their analysis.
1 Intrinsic Trailing P/E
2 Intrinsic Leading P/E
3 Intrinsic Value based on Intrinsic Leading P/E if the Actual Earnings of Agritec Tractors are PKR 22.5 t
s to use Relative Valuation Technique. Agritec Tractors unfortunately is the unique company in the industry and has no app
of benchmark Price based multiples. Haris his new associate is of the view that Rehan can still apply the relative valuation
han must use Intrinisic or Justified P/E which is more reflective assessment of price based on company's fundamentals.
Haris came up with some interesting facts. It has been observed by him that Agritec Tractor is an extremely generous comp
and distribute the rest among shareholders. Due to this generous practice company is not in a position to develop large ch
years. To satisfy the equity investors and to boost up the ROE, Agritec operates at a high leverage of 2.5.
tive as reflected by its systematic risk which is around 12% more than the average stock market's systematic risk.
ot much of the equity investors would be interested in Agritec Tractors due to overall macroeconomic factors which are ot
e years, due to which many equity investors are moving their capital towards govt. securities. On the other hand, the overa
r and above the risk free rate.

ec Tractors are PKR 22.5 today

 dustry and has no appropriate
the relative valuation technique
y's fundamentals.
emely generous company when it comes to
on to develop large chunk of cash for further investments

stematic risk.
c factors which are otherwise highly rewarding.
other hand, the overall
International steel hires an independent equity analyst to calculate the intrinsic value of company's share due to
International Steel's management believes that the company has a strong growth potential and the market is als
and hovering in the vicinity of around 7%, the stock market is rewarding enough to offer average market return
International steel considers itself as slightly riskier stock as its cashflows are tied with the boom in constructio
The company's directors inform equity analyst that they recently estimated Free cash flow to Equity which is PK
According to analysts estimates based on several industry and macro analysis, the company's cashflows and rev

Year FCFE Growth Rate

"1-3" 22%
"4-8" 18%
"9-12" 13%
"13-15" 9%
16 onward 7%

If the analysts estimates are right, You are required to calculate the Stock value based on FCFE multiple stage va
e of company's share due to the potential acquisition by a competing steel group.
ential and the market is also in favour of company. Although the risk free rate in the economy is high
ffer average market return of around 18% over the last many years.
th the boom in construction activities and that fact is reflected in company's systematic risk which is around 9.5% greater
flow to Equity which is PKR 12 per share and the number of shares issued are 375 million.
mpany's cashflows and revenues could potentially follow the following growth trajectory.

on FCFE multiple stage valuation approach.

is around 9.5% greater than the overall stock market risk.
The Earning, cashflows, book value and revenue data for the following french banks is on per share basis
Under the assumption that these banks are comparable to Credit Munis. Calculate the Instrinsic Value for Credit
Make your calculations assuming all valuation matrices carry equal weights.
Also comment that the bank looks undervalued or overvalued based on current prices.

BNP Parisbas Credit Agricole LCL

Price € 128.00 € 152.00 € 78.00
Earnings € 16.00 € 21.00 € 10.00
Cash Flow € 6.00 € 9.00 € 5.00
Book Value € 158.00 € 190.00 € 121.00
Revenues € 39.00 € 50.00 € 26.00
is on per share basis
e Instrinsic Value for Credit Munis, and the expected percentage returns based on intrinsic value and the current price.

Credit Munis
€ 65.00
€ 15.00
€ 2.47
€ 110.00
€ 45.00