Webjet Ltd (WEB.AX) was founded in 1998 and was listed at the ASX in 2000 through a reverse
takeover. It delivers its business mainly through digital platform in both retail consumer markets as
well as wholesale corporate markets.As a company analyst for DEBANAWAZA Stockbroker Ltd, you are expected to prepare a valuation report on the company.
Complete the following parts of which your report should contain
Part A – Quantitative Analysis (20 marks)
1. Estimate the value (per share) of the company using the Free-Cash-Flow-to Equity (FCFE)
Note: You are only required to look up FCFE for the firm over the last two years. The biggest
challenge is finding the appropriate 'discount rate'. Revise your FIN20006 on the relevant topics early (i.e. internal based models such as Weighted Cost of Capital, WACC or Risk based models such as Capital Asset Pricing/Market models are fine).
2. Provide a brief comment on the dividend policy of the firm.
Note: You are only required to look up the dividend paid by the firm over the last two years. It is also a good exercise to use the dividend discount model to investigate the multiples the market was over
the last few years. Apply your knowledge from FIN20006 on dividend policy.
Part B – Qualitative Analysis (6 marks)
Using economic, industry and firm based analysis, estimate the potential and growth of the sector
as well as WEB.AX. Are they able to achieve growth under the current economic climate?
Note: Instead of merely stating facts about the economy, industry and the firm, provide some
analysis. Make a judgement call on how these facts will affect the company’s operation, profitability and most important of all, growth and cashflows.
Part C – Conclusion (4 marks)
You are required to make recommendations for your clients to either buy, sell or hold. Please
provide some justifications (using your findings from Part A and B) to your recommendations.
Note: You should state your outlook horizon in your justifications (1 year / 2 years).
Use the most recent financials available (Q3 2017 or Q4 2017). When estimating your growth,
you are only expected to use two years worth of historical data and forecast one year ahead.