# Investment Planning Q.3b

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

1. ### StumpedMember

Joined:
3rd Aug, 2011
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Location:
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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. ### jellyNew Member

Joined:
26th Aug, 2011
Posts:
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Location:
Melbourne
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. ### jellyNew Member

Joined:
26th Aug, 2011
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Location:
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jelly

I am also stumped on iii)

4. ### HectorMember

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17th Jul, 2011
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Location:
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. ### jellyNew Member

Joined:
26th Aug, 2011
Posts:
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Location:
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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. ### StumpedMember

Joined:
3rd Aug, 2011
Posts:
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Location:
Brisbane
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. ### jellyNew Member

Joined:
26th Aug, 2011
Posts:
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Location:
Melbourne
jelly