Evaluate the under-pricing or over-pricing, Financial Management

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Assume that you work with a large financial consulting firm. You are one of the junior financial consultants there specializing in IPO issue. A team of foreign investors has recently contacted your firm for consultation as they are interested to invest in the share ownership of companies listed in Bursa Malaysia. They are only interested to invest in companies which are listed at least 3 years ago. As the initial stage of their investment strategy, the foreign investors would like to know more about the companies start from the day they went IPO. You are one of the consultants assigned by your boss to complete the task. Your boss has asked you to prepare a report on a company from Bursa Malaysia. Your report must be impartial and unbiased as all the reports compiled from all the consultants involved in the task will be used as reference by the foreign investors to decide on which stocks to invest and which to avoid. As the foreign investors are not very familiar with the IPO market as well as the general stock market condition in Malaysia, your duty is therefore to address the following issues pertaining to the company in your report:  

(a)   Discuss your company's core businesses, its major competitors and two main possible sources of competitive advantage (or lack of competitive advantage) for the company. Do you think your company is a leader or a follower in the industry? Why?

(b)   Discuss what are the main reasons for your company to go public? What do you could possibly be some of the concerns for your company to go public? Why?

(c)    Evaluate the extent of the under-pricing (or over-pricing) for your company's IPO. What are some of the possible reasons that could justify the under-pricing (or over-pricing) of the company's IPO? How much money is left on the table?

(d)   Discuss the long run performance of your company's IPO. Is it impressive? Why?

(e)   Evaluate the past 5-year capital structure of your company. Do you think your company is currently using too much of debt or equity? Recommend an appropriate strategy of capital structure for the next 5-year for your company.


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