Đang tải... (xem toàn văn)
These financial ratios enable us to evaluate the performance of Telus Corporation in recent years. Look at the table above, we can see some positive sign such as the increase in total assets turnover, net profit margin and ROA. Together with that, Telus seems less likely to use debt financing its assets (0.61 in 2009, fall to 0.58 in 2010). The equity multiplier and ROE, in contrast, tend to reduce in this period. ROE, from 13% in 2008, increase a little in 2009 but then fall to 12.69% in 2010. ROE is equal ROA multi equity plier, so, as ROA increases, the decrease of ROE is a result of decrease in equity multiplier. As under DuPont system, maximizing ROE is considered as an appropriate goal for a firm, this seems to be a negative sign. As in the global economic downturn, this slight negative sign is understandable.
Corporate Finance INDIVIDUAL ASSIGNMENT Student: Roll number: Class: Lecturer: E-mail: STUDY ON: LETUS CORPORATION Table contents Table contents Introduction to the Telus Corporation I Analysis of the company II Current situation 2 Telus Corporation’s recent years performance Analysis of the Telus’s stock III Stock price over times Stock valuation a Estimation of required of return b Assumption of the growth rate of dividend c The intrinsic value of the stock d Conclusion 10 References 10 Appendices 11 Appendix 11 Appendix 12 Appendix 14 I Introduction to the Telus Corporation Telus Corporation (Symbol TU), established in 1993 in Burnaby, Canada, is a national telecommunications company that provides a wide range of telecommunications products and services including wireless, data, Internet protocol (IP), voice, and television The company operates through segments: Wireless and Wireline - The wireless segments provides digital personal communications, equipment sales, and wireless internet services - The wireline segment offers voice local and voice long distance services, data services, which include television, and managed and legacy data services, as well as internet, enhanced data, and hosting services, and other telecommunications services Over its history, Telus has been delivering innovative telecommunications solutions to Canadian and become the second largest telecommunication company in Canada Telus’s strategic intent is to unleash the power of the Internet to deliver the best solutions to Canadians at home, in the workplace and on the move Some recent important projects: - February 7, 2012, new innovation from Telus – Optick TV – become the first service in the world to enable the customers to control both live and recorded TV using hand gestures and voice commands - February 9, 2012, Telus launched 4G LTE wireless network which went live in 14 metropolitan areas across Canada II Analysis of the company Current situation The table following partly shows the position of Telus Corporation in comparison with its competitors as well as the whole wireless communication industry (figure of October 6, 2012) (http://finance.yahoo.com) The figures, particularly the rank in the second tables partly show us Telus has a quite high position in the industry Some typical figures can be addressed like P/E = 16.61, ranked 40/200, dividend yield (annual) of 3.90%, ranked 11/200 Revenue of Telus (10.67 billion dollars) is much higher than the industry in general (2.52 billion dollars), even though it’s lower than some of its competitors such as BCE (10.16 billion dollars) or RCI (12.58 billion dollars) Telus Corporation’s recent years performance The table, and the corresponding graph, below shows main figures (Revenue and Net income) in the Income statement of Letus (http://finance.yahoo.com) Overall, Telus Corporation has witnessed a growth recent years Evidently, both revenue and net income of the corporation have increased, even though the rate of growth tends to be smaller Particularly, look at the graph for Net income it’s clear that Telus’s net income grows quite stably through years In the next table, I compute some typical financial ratios for Telus Corporation during three years, 2008, 2009 and 1010 (The detail figures are in the Balance Sheet, Income Statement and Cash Flow of Telus for 2008, 2009, and 2010 that are in enclosed in Appendices) Ratios Formula 2010 2009 2008 Current ratios Current assets Current liabilitie s 0.35 0.38 0.51 Total assets turnover Net sales Total assets 0.5 0.5 0.48 Total debt ratios Total debt Total asset 0.58 0.61 0.6 Net profit margin Net income Net sales 10.61% 10.43% 10.84% Equity multiplier Total assets Total equity 2.39 2.54 2.5 5.31% 5.22% 5.20% 12.69% 13.26% 13.00% DuPont system ROA ROE Net profit margin * Total asset turnover ROE ROA * Equity multiplier These financial ratios enable us to evaluate the performance of Telus Corporation in recent years Look at the table above, we can see some positive sign such as the increase in total assets turnover, net profit margin and ROA Together with that, Telus seems less likely to use debt financing its assets (0.61 in 2009, fall to 0.58 in 2010) The equity multiplier and ROE, in contrast, tend to reduce in this period ROE, from 13% in 2008, increase a little in 2009 but then fall to 12.69% in 2010 ROE is equal ROA multi equity plier, so, as ROA increases, the decrease of ROE is a result of decrease in equity multiplier As under DuPont system, maximizing ROE is considered as an appropriate goal for a firm, this seems to be a negative sign As in the global economic downturn, this slight negative sign is understandable Conclusion: Telus Corporation is less likely to use debt financing its assets, which reduce equity multiplier and ROE a little bit However, overall the Corporation still witness a constant growth through years (quite constant increase in Net income) III Analysis of the Telus’s stock Stock price over times (http://finance.yahoo.com) The first graph shows the price of common stock of Telus from 2008 until now As you can see, in 2008-2009, because of the global economic recession, the price of Telus felt sharply ($31.15 in December, 2009) But soon after, from 2009 until now, the price increase constantly And the second picture is the price and some information for TU share of stock in the trading day 5/10/2012 The price reaches $64.27 per share of stock Stock valuation Now, I get today, Saturday, October 6, 2012 as the time zero to calculate the present intrinsic value of share of stock for TU a Estimation of required of return The required rate of return, or the expected return is computed by the equation: E ( R) Rrf [ E ( Rm ) Rrf ] - for the Telus Corporation is 0.6 (http://finance.yahoo.com/q?s=TU) - Expected return E(Rm) is the average value of the U.S stock market, 12.5% - Risk free (Rrf) is the expected return for US government treasury 30-year bond As I suppose the time zero is today, Saturday, October 6, 2012, I get the value of risk free for October 5, 2012 So, risk free Rrf = 2.96 (http://www.treasury.gov) E ( R) Rrf [ E ( Rm ) Rrf ] 0.0296 0.6 *[0.125 0.0296] 0.08684 or 8.68% b Assumption of the growth rate of dividend The dividend of the Corporation recent years is shown in the graph below As it’s shown in the table and in the graph, especially the red line in the table, dividend of Telus Corporation had decreased a little in 2008, but quickly rise again in later year, until the end of 2011, dividend was $0.57 Generally, the dividend increase but the growth rate is not constant: 3.08% in 2008; 10.34% in 2009; 15.63% in 2010 and 11.17% in 2011(Based on dividend in September each year) I expect the dividend and growth rate for the next four year would be like below And, after four year of fast growing, Telus will experience a constant growth rate of 7.51% c The intrinsic value of the stock Now, let’s sum up all of assumptions that have been made Firstly, I computed the required rate of return for TU stock is 8.68% I also expected dividends for next four year of fast-growing before it constantly grows at rate of 7.51% Year Dividend Growth rate 2008 2009 2010 2011 2012 0.422 0.435 0.48 0.555 0.617 3.08 10.34 15.63 11.17 2103 2014 2015 2016 2017 0.689 0.761 0.834 0.905 0.973 11.67 10.45 9.59 8.51 7.51 (Constantly grow from 2017 at 7.51%) The price for TU stock at the end of the fourth year would be: P4 P2016 D2017 0.973 $83.18 per share of stock R g 2017 0.0868 0.0751 Finally, I can calculate the present intrinsic value of TU share of stock (at the day 6/10/2012) D2013 D2014 D2015 D2016 P2016 (1 R) (1 R) (1 R)3 (1 R) (1 R) 0.689 0.761 0.834 0.905 83.18 (1 0.0868) (1 0.0868) (1 0.0868) (1 0.0868) (1 0.0868) $62.20 P0 P2012 d Conclusion The present intrinsic value of TU is $62.20 per share of stock The quoted price for TU stock is actually $64.27 (http://finance.yahoo.com) So, the stock of Telus Corporation (TU) is being over-valued We should sell the TU stock at the moment References Book: Fundamentals of Corporate Finance, 2nd edition 10 per share of stock Websites: http://finance.yahoo.com http://www.treasury.gov http://telus.com/en_CA/bcHome_en.html http://online.wsj.com/mdc/public/page/2_3022-bondmkt.html Appendices Appendix Balance sheet of Telus Corporation for 2008, 2009 and 2010 (Currency in thousand USD) Dec 30, 2009 Dec 30, 2008 25,000 43,000 3,273 - - 8,183 Net Receivables 973,000 710,000 810,935 Inventory 283,000 270,000 272,494 Other Current Assets 113,000 105,000 180,026 1,390,000 1,127,000 1,274,911 37,000 41,000 - Property Plant and Equipment 7,722,000 7,729,000 5,987,501 Goodwill 3,572,000 3,572,000 3,245,378 Intangible Assets 5,134,000 5,148,000 5,460,516 - - - 1,744,000 1,602,000 600,632 - - - Period Ending Dec 30, 2010 Assets Current Assets Cash And Cash Equivalents Short Term Investments Total Current Assets Long Term Investments Accumulated Amortization Other Assets Deferred Long Term Asset Charges 11 Total Assets 19,599,000 19,219,000 16,568,938 Liabilities Current Liabilities Accounts Payable 2,676,000 2,685,000 2,436,897 Short/Current Long Term Debt 1,162,000 144,000 64,646 111,000 135,000 - Total Current Liabilities 3,949,000 2,964,000 2,501,543 Long Term Debt 5,313,000 6,090,000 5,217,481 Other Liabilities 638,000 1,271,000 1,027,785 1,498,000 1,319,000 1,181,625 22,000 21,000 18,821 - - - 11,420,000 11,665,000 9,947,255 Other Current Liabilities Deferred Long Term Liability Charges Minority Interest Negative Goodwill Total Liabilities Stockholders' Equity Misc Stocks Options Warrants - - - Redeemable Preferred Stock - - - Preferred Stock - - - Common Stock - - 6,620,865 Retained Earnings - - 265,129 Treasury Stock - - - Capital Surplus - - 161,205 Other Stockholder Equity - - (425,516) Total Stockholder Equity 8,201,000 7,575,000 6,621,684 Net Tangible Assets (505,000) (1,145,000) (2,084,210) Appendix Income statement of Telus Corporation for 2008, 2009 and 2010 (Currency in thousand USD) 12 Income Statement View: Annual Data | Quarterly Data All numbers in thousands Dec 31, 2010 Dec 31, 2009 Dec 31, 2008 Period Ending Total Revenue 9,779,000 9,606,000 7,899,050 Cost of Revenue 6,062,000 5,925,000 2,697,935 Gross Profit 3,717,000 3,681,000 5,201,115 Operating Expenses Research Development - - - Selling General and Administrative - - 2,111,214 74,000 190,000 48,280 1,735,000 1,722,000 1,442,663 - - - 1,908,000 1,769,000 1,598,958 Non Recurring Others Total Operating Expenses Operating Income or Loss Income from Continuing Operations Total Other Income/Expenses Net (542,000) (564,000) (18,003) Earnings Before Interest And Taxes 1,366,000 1,205,000 1,615,324 - - 390,329 1,366,000 1,205,000 1,224,995 328,000 203,000 322,410 - - (2,455) 1,038,000 1,002,000 865,761 Interest Expense Income Before Tax Income Tax Expense Minority Interest Net Income From Continuing Ops Non-recurring Events Discontinued Operations - - - Extraordinary Items - - - Effect Of Accounting Changes - - - Other Items - - - 1,038,000 1,002,000 865,761 - - - 1,038,000 1,002,000 865,761 Net Income Preferred Stock And Other Adjustments Net Income Applicable To Common Shares 13 Appendix Cash flows of Telus Corporation for 2008, 2009 and 2010 (Currency in thousand USD) Cash Flow View: Annual Data | Quarterly Data All numbers in thousands Period Ending Dec 30, 2010 Dec 30, 2009 Dec 30, 2008 Net Income 1,038,000 1,002,000 865,761 Operating Activities, Cash Flows Provided By or Used In Depreciation 1,735,000 1,722,000 1,404,203 9,000 (159,000) (19,639) Changes In Accounts Receivables - - (177,571) Changes In Liabilities - - 21,276 Changes In Inventories - - (73,647) (236,000) 339,000 229,124 2,546,000 2,904,000 2,306,788 Adjustments To Net Income Changes In Other Operating Activities Total Cash Flow From Operating Activities Investing Activities, Cash Flows Provided By or Used In Capital Expenditures (1,721,000) (2,103,000) (1,521,220) - - - 14,000 (25,000) (1,288,004) (1,707,000) (2,128,000) (2,809,224) Investments Other Cash flows from Investing Activities Total Cash Flows From Investing Activities Financing Activities, Cash Flows Provided By or Used In Dividends Paid Sale Purchase of Stock Net Borrowings (476,000) (608,000) (358,415) 15,000 1,000 (229,124) (402,000) (132,000) 1,076,883 - - - (863,000) (739,000) 489,343 - - - (24,000) 37,000 (13,093) Other Cash Flows from Financing Activities Total Cash Flows From Financing Activities Effect Of Exchange Rate Changes Change In Cash and Cash Equivalents 14 ... Options Warrants - - - Redeemable Preferred Stock - - - Preferred Stock - - - Common Stock - - 6,620,865 Retained Earnings - - 265,129 Treasury Stock - - - Capital Surplus - - 161,205 Other Stockholder... Continuing Ops Non-recurring Events Discontinued Operations - - - Extraordinary Items - - - Effect Of Accounting Changes - - - Other Items - - - 1,038,000 1,002,000 865,761 - - - 1,038,000 1,002,000... Operating Expenses Research Development - - - Selling General and Administrative - - 2,111,214 74,000 190,000 48,280 1,735,000 1,722,000 1,442,663 - - - 1,908,000 1,769,000 1,598,958 Non Recurring