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Investment Planning Q.3b

Discussion in 'Financial Planning Study Group' started by Stumped, 4th Aug, 2011.

  1. Stumped

    Stumped Member

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    Hi All,

    Just wondering if could share all calculations/ans. for Q.3b about the Suncorp shares? Below are my calculations
    i)
    Earnings per share = Net profit available for ordinary shareholders ÷ number of ordinary shares issued
    Earnings per share (EPS) = 364,000,000 ÷ 1,262,600,000
    EPS = .29
    P/E Ratio = Current Market Price ÷ Earnings per share
    P/E = $8.50 ÷ .29 = 29.31

    ii)
    364,000,000 x 12.33 = 4.488 billion
    Fair Price=3.56
    iii)????

    Any help would be much appreciated
    Cheers
    Steve
     
  2. jelly

    jelly New Member

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    jelly


    Hi Steve

    I got the same answer for
    i) Earnings per share - 0.29 & P/E Ratio - $29.31

    but different answer for ii) Fair price - as follows, I think its right

    Fair price = P/E ratio x Earnings Per Share
    = 12.33 x $0.68
    = $7.62

    Regards
    jelly
     
  3. jelly

    jelly New Member

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    jelly

    I am also stumped on iii)
     
  4. Hector

    Hector Member

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    Adelaide
    Hi ,

    I also got

    Fair price = P/E ratio x Earnings Per Share
    = 12.33 x $0.68
    = $7.62
    as for iii) I recommended a sell as there current price was $8.50 per share as opposed to their current fair price of $7.62
     
  5. jelly

    jelly New Member

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    Jelly

    Thanks Hector.

    Where did you go to obtain specific company information re Suncorp. I downloaded the Annual Report...thought this was the most obvious solution.
     
  6. Stumped

    Stumped Member

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    A few Points

    Here are a few points to consider:

    Suncorp Merged with Promina (AAMI, Vero etc) - streamlining as a result
    Suncorp has new CEO Patrick Snowball
    Suncorp outsourcing non-core activities
    Exposure to natural disasters/events
    Cost of re-insurance (insurance for insurers)
    Project called 20/20 designed to deliver a 20% reduction in costs 20% increase in revenue.

    I suggest you use good old 'Google' to search for articles relating to the above. The annual report is ok but i found it difficult to wade through all the 'mumbo jumbo'

    Hope this helps
     
  7. jelly

    jelly New Member

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    jelly

    Thats very helpful, than you.