Free Essay

Investment Management


Submitted By wangyixuan
Words 1457
Pages 6
Investment Report by 28/2/2012

Name of company: AVEVA GROUP RIC: AVV.L

Price: 1732 Date: 28 Feb 2012

Company profile:

AVEVA Group PLC operates in the Computer related services sector. AVEVA Group plc is a holding company. The Company is engaged in engineering design and information management solutions for the process plant, power and marine industries. It activities include marketing and development of computer software and services for engineering and related solutions.

One-year Price chart:


Price performance: Key financial forecasts and ratios:

| |Actual |Estimate |
| |MAR 11 |MAR 11 |MAR 12 |MAR 13 |
|EPS(GBp) |- |- |63.934 |74.790 |
|DPS(GBp) |18.250 |18.590 |20.100 |22.750 |
|PE |- |- |26.590 |22.730 |
|ROE% |17.04 |
|Beta |1.34 |
|Alpha |0.01 |

|Price | |
|% 1 M |6.19 |3.18 |
|% 3 M |20.61 |14.54 |
|% 6 M |16.01 |15.31 |
|% 1 Y |6.58 |-1.43 |

Valuation (by DDM & by comparables):

|DDM |1333.52 |PE Model |13.927 |

View of market analysts:

A majority of experts think that the earning per share is downgrade.

Executive summary: To sum up, the investors was suggested to hold the stock of AVEVA which depend on the valuation and analysis.


The UK is one of the world's leading economies and is well-placed to benefit from the global economic recovery. Like almost every other economy, the UK was hit hard by the global economic crisis. After over 15 years of strong but increasingly unbalanced growth, the UK economy contracted sharply during the crisis. Other advanced economies were similarly affected.

The UK economy started growing again in the second half of 2009. Unemployment in the UK remains well below the levels in the US and the euro-zone. Rebalancing the economy and returning to sustainable economic growth is the Government’s overriding priority.

AVEVA Group plc is a holding company. The Company is engaged in engineering design and information management solutions for the process plant, power and marine industries. It activities include marketing and development of computer software and services for engineering and related solutions. Year on year AVEVA Group PLC grew revenues 17.29% from 148.33m to 173.99m. In addition the company has reduced the cost of goods sold as a percent of sales, selling, general and administrative expenses as a percent of sales and interest paid as a percent of sales. These improvements contributed to 3.15% net income growth from 33.44m to 34.49m. As of Feb 25, 2012, the consensus forecast amongst 16 polled investment analysts covering AVEVA Group plc advises investors to hold their position in the company. This has been the consensus forecast since the sentiment of investment analysts deteriorated on Dec 21, 2011. The previous consensus forecast advised that AVEVA Group plc would outperform the market.

Price performance

From the comparison of company’s returns and FTSE 100, it can be concluded that the company’s return is greater than FTSE Index. The company performed well, the return is greater than FTSE-100. The returns are also fluctuated during this year. It had grown 16.01% at the end of first half year because AVEVA Group cooperated with the Chinese company GSHI in order to optimize shipyard processes. This event may cause the price rise rapidly. In the past quarter, the price performance of the firm exceeded FTSE-100 which is 20.61%. During that time, AVEVA researched and developed new products and the long customer Metso invested new project with it. These events also influence the trends of AVEVA. Last month the price still much higher than the evaluation of FTSE, the company performed very well.

The company’s alpha with positive 0.01 which means attractive to investors and suggests an underpriced security


The risk free rate is 2%, beta of AVEVA Group is 1.34 and the market risk premium is 8%, so the market capitalization rate of AVEVA is:

K= rf + β× MRP=2%+ 1.34%×8%=12.72%

The DPS of the firm in 2012 is 23.837, the adjusted EPS is 58. The dividend payout ratio equals to DPS divide EPS; plowback ratio b equals one minus dividend payout ratio. The ROE of the company is 17.04%, so the long-term growth can be calculated as:


The DPS of 2012 is 23.837, in 2013 is 27.504 and in 2014 is 27.218; DDM can be calculated through the formula as following:


Through calculation the DDM is 1333.52, the real stock price is 1732. So the stock price may be over estimated by the market. The disadvantage of DDM is it may sensitive to each parameter.

Through the calculation of PE model, the fair value is EPS 49.9 times Sector PE 27.91 and gets the fair value which is 1393.

Fair Value= EPS× Sector PE=49.9×27.91=1392.709≈1393

The PE model is also lower than the stock price 1732. It also means the price may be overpriced by the market.

Analysts’ view and company’s fundamentals

There are five people keep hold attitude to this stock; four people think the stock is outperformed, three people want to buy this stock; two people respectively think the stock underperformed and want to sell it. Majority of people change their attitude to this stock because they think the stock’s earning per share will decrease in the future. The data from 2010 to 2011 is not available.

The global IT services market is expected to grow by 3.5% in 2011, and 4.5% in 2012 as companies are focusing not only on controlling costs but also increasing efficiency and productivity using more and more information technology to improve their competitive advantage. So the software industry is still has the potential opportunity to get profit. The stock of this company was suggested to hold.


This paper analyses how the company AVEVA does in software industry. The company performed well in last few years. Especially in last year, the price of the stock is higher than FTSE 100 index, and a majority of people suggest holding the stock. The estimation of earning per share in the future seems go up. Although the DDM is lower than the stock price, the stock still have potential to perform well. So I suggest the stock should be hold.

News analysis

|Date |News Summary |Brief comments |
|1/2/2011 |AVEVA announced that STX OSV AS has signed an agreement to purchase the full AVEVA Marine |Aveva enhanced the |
| |solution suite. This deployment will provide STX OSV AS with a powerful system for integrated |cooperation with other |
| |Hull and Outfitting design. |company; it is beneficial for|
| | |its future development. |
|11/3/2011 |London (ShareCast)- 0830: Japan (NYSE: MCO - news)'s huge earthquake is something else for |The earth quake influenced |
| |investors to worry about and added to the situation in Libya, Spain's debt downgrade and weak |FTSE, Aveva’s price in the |
| |US jobs numbers, Footsie (FTSE: FTSE - news) has sagged in early dealings. FTSE 100 |gloomy outlook on the market.|
| |(Euronext: VFTSE.NX - news) down 26 at 5,819. | |
|3/6/2011 |LONDON (Share Cast) - After a steep decline after lunch - on the back of a poor start on Wall |Aveva performed well at |
| |Street - the Footsie (FTSE: FTSE -news) recovered to finish above water, albeit only by around|during that time, the price |
| |0.1%. |was higher than FTSE. |
|5/8/2011 | G7 finance ministers to meet within days • FTSE 100 (Euronext: VFTSE.NX - news) suffers fifth|Aveva’s stock price decreased|
| |biggest weekly fall in its history • Wall Street 'jobs' help Dow (NYSE: DPD - news) finish up |dramatically the same with |
| |0.5pc • Italy vows to speed up austerity measures • William Hague calls for 'concerted effort'|FTSE. |
| |on crisis | |
|10/10/2011 |AVEVA is pleased to announce that, through its wholly owned subsidiary AVEVA Solutions |Aveva was likely to |
| |Limited, on 7 October 2011 it completed the acquisition of Z+F UK Limited (a subsidiary of Z+F|outperform the market in the |
| |GmbH) for net consideration of £6.3 million on a debt free/cash free basis which has been |foreseeable future. The stock|
| |satisfied from the company's existing cash resources. |price was higher than FTSE. |
|14/11/2011 |Trade was choppy today but the Footsie (FTSE: FTSE - news) was unable to recover to its |Aveva may influence by FTSE |
| |intraday highs, finishing slightly in the red. Financial stocks bore the brunt of the |and decrease in the future |
| |negative mood, with Standard Chartered (Xetra: 859123 -news), Resolution, Legal & General |two months. |
| |(LSE: LGEN.L news) and Schroders (Berlin: PYX.BE news)among the worst performers. | |

Similar Documents

Premium Essay

Investment Management

...Firstname Lastname Instructor’s Name Course Number 21 July 2012 Investment Management Investment Fundamentals Investment is the process of employing saved money in financial institutions with the hope of gaining returns in the future. Investment management is the process of managing the money employed in financial institutions with the hope of gaining positive returns. The financial institutions are catalogued in a case known as an investment portfolio. An individual with saved money may opt to invest it in financial institutions as a way of adding value to the money. Investing for individuals involves identifying the sources of income for investment such as savings and loans from others. The individual then comes up with investment objectives that will guide his investment decisions. After the funds have been secured, the investor does a market analysis to determine which the best investment opportunities available are for him. A market analysis may be done through a “bottom top” approach or a “top bottom” approach. The “top bottom approach” starts from a macroeconomic level of the market and works downwards towards the different service sectors and industries, finishing with the specific corporate institutions and their portfolio. Once at the corporate level, the investor can decide which investments will afford better returns in the long run (Klammer 36). A competitive analysis is done by the potential investor to determine how his options stand against the other investors...

Words: 4835 - Pages: 20

Premium Essay

Investment Management

...beta of a particular investment or portfolio (Investopedia, n.d.). Beta represents the investment or portfolio sensitivity to the market fluctuation. The CAPM is based on few assumptions: * There are no transaction and taxation costs. * Investors are assumed to invest in diversified portfolios. * Investors are rational. * Investors do not have the power to influence market price. * Investors can borrow and lend unlimited amounts under the risk-free rate. * Investors have access to the same information. * Investors aim to maximize economic utilities. * Investors deal with investments that are fully divisible. * Investors are subject to information that is available at the same time. However, CAPM has several limitations. CAPM is created as a theoretical model that its restrictive and unrealistic assumptions are the reason that cause its limitations. One of the limitations of CAPM is the difficulty in estimating the risk-free rate of return. A government security is often used as a best estimate for risk free rate of return. There is a low possibility that the government will default, but the uncertainty in the economic conditions causes the rate of return for government security to be hard to predict. In addition, investors may not hold portfolios that are well diversified. As a result, CAPM is unable to indicate the investor’s behaviour for investment and consequently beta may fail to estimate the risk of investment. Besides that, stability...

Words: 433 - Pages: 2

Premium Essay

Investment Management

...Investment Management i) The term investment refers to funds invested in various securities — consisting of Government and semi Govt. securities, loans, debentures, shares and bonds etc. ❖ Elements of Investment :- a) Reward (Return) b) Risk and Return c) Time ❖ Nature of Investment :- Investment requires a continuous flow of decisions which can not be avoided. The investment decisions are based on many streams of data which taken together, represent to an investor the observable environment and the general and particular of the securities & enterprises in which he may invest. ❖ Investment Environment :- a) Stable Government b) Stable Currency c) Presence of Public financial Institutions d) Development of corporate sector. [pic] ❖ Different types of Port-folios for Investment :- Investment — Concept of Port-folio :- Portfolio is the collection of financial or real assets such as equity shares or debentures, bonds, treasury bills & property etc. Steps in selecting a portfolio a) framing of investment policies. b) Valuation of Financial Instruments c) Investment Analysis d) Construction of Portfolio Port-folio management is the investment of funds in different securities in which total risk of the port-folio is minimized while expecting maximum return form it. ❖ Port-folio construction :- i) Determination of Diversification...

Words: 2435 - Pages: 10

Premium Essay

Investment Strategy and Portfolio Management

...INVESTMENT STRATEGY AND PORTFOLIO MANAGEMENT Executive Summary Kaplan is a charitable fund established in 2007 to provide an investment vehicle for investors seeking to finance some educational objectives. The aim of the fund is to grow members’ contributions through investment in securities. Investors in Kaplan are yet to start making withdrawals from the fund but are due to begin in June 2012. This report looks at current issues in the investment environment in the UK, Europe, and the rest of the world which have an impact on Kaplan’s operations. It also examines strategic asset allocation and investment strategies that Kaplan should employ to achieve its goals. In addition, the report recommends areas in which the fund’s management should actively manage investments and those areas in which passive management would be the better option. Overview of the Investment Environment In recent years, the global fund sector has continued to register robust growth in many countries with developed financial markets. Collective investment schemes are becoming the most preferred investment vehicles for investors because of their obvious advantages including diversification, professional management of investments, liquidity and investment advice for investors and superior returns (Roll, 2008). Indeed, as by the end of 2011, the global investment fund industry was worth US $11.7 trillion which translates to 17 percent of primary securities holdings around the world. However...

Words: 2861 - Pages: 12

Premium Essay

Investment Management Case Study

...Beta Management Company | | |Investment Management case study | Table of contents Backgrounds……………………………………………………….……1 Strategies………………………………………………………………...1 Background of California R.E.I.T and Brown Group Inc……………2 Return and risk…………………………………………………….....…2 Summary………………………………………………………………...4 Appendix………………………………………………………………...5 Background: Beta Management Company is a small investment management company based in a Boston suburb founded in 1988. As the company developed, they had roughly 25 million dollars in the 1991. The goal of the company is to enhance returns but reduce risks for clients via market timing. Currently, the company’s funds were invested into the Vanguard 500, an S&P 500 no-load and low-expense index funds (with the reminder in money market instruments). As time goes by, Sarah Wolfe who is the founder of this company think about increasing her equity exposure to 80% with the purchase of individual stock. Strategies: Firstly, Sarah Wolfe uses a market timing strategy based on two portfolios: the Vanguard Index and money market. In order to obtain the capital gains, once the company predicts the market value will rise, it will transfer its assets from the money market to the Index. The limit will up to a maximum 99% of total assets. On the other hand when the company expects the market value will decrease, it...

Words: 1292 - Pages: 6

Premium Essay

Investment Management for Marathon Oil

...Introduction This stock analysis paper is for Marathon Oil (MRO) which has been chosen because the oil and gas sector is in the throes of an energy revolution in the United States. With the endless opportunities offered by fracking and the possibility that the United States has become a net energy exporter again after many decades, the prospects for the oil and gas sector are indeed bright. Further, MRO is a midcap company meaning that it is neither too big nor too small which means that it is on the cusp of a transformation where it can ramp up its operations in a scalable and sustainable manner without affecting either its financials or its core operating principles. The following are the calculations of two different models, the CAPM and the DDM or the Dividend Discount Model. CAPM= Rf + beta*(Rm-Rf), where Rf is the risk free rate, Rm is the expected market return and beta is the beta for the asset. CAPM=8%+1.7*(1.7*8%-8%) =17.52%, where risk free rate=8%, beta=1.7, MCR=1.7*8%=13.6% Under the DDM, Fair Value (P) = D/r-g, where D represents dividend paid, r represents discounting rate and g represents the expected dividend growth. The discounting rate is 13.6%, and the Fair Value=0.76/ (1.136-1.089) =16.17 Market Price = Expected Dividend Per Share + (Expected End of Year Price – Current Share Price)/ Current Share Price. Given the fact that Expected Dividend Per Share is 2.87, Expected End of Year Price is 45.3, and Current Share Price is 39.94, we get the Market Price...

Words: 1996 - Pages: 8

Premium Essay

Yale Case Solution - Investment Management

...1. How is Yale’s investment philosophy reflected in its strategic asset allocation? Yale’s investment philosophy is one of the critical factors that played into the success of the fund’s performance in the past years. The philosophy is based on 5 principles: focus on equity, diversification, opportunities in inefficient markets, outside managers and alignment of manager’s incentives with Yale’s interests. In the paragraphs below I will discuss how each of these principles is reflected in the endowment’s asset allocation, as shown from Exhibit 1. Yale’s belief in equities is reflected through the endowment’s heavy allocation in equity from 1985-2010. The weight allocation, however, is heavier in the earlier years (1985-1999) than in later years (1999-2010). In the early years, the allocation equity (both domestic and foreign) has been higher than other class assets. From 2000- onwards, allocation to other asset class such as private equity, real assets, and absolute return starting to rise and dominate the asset portfolio. By 2010, the weight of real assets (27.5%), private equity (30.3%), and absolute return (21%) individually are higher than the weight of both equities combined (16.9%). This is not exactly in line with their philosophy focusing on equities. Yale’s second philosophy is diversification to reduce risk by limiting exposure to any single class. This is reflected in their asset allocation over the years. In Exhibit 1, Yale has been consistently investing in 6 asset...

Words: 1027 - Pages: 5

Premium Essay

A Study on Investment Management Activities of Islami Bank Bangladesh Ltd

...A STUDY ON INVESTMENT MANAGEMENT ACTIVITIES OF ISLAMI BANK BANGLADESH LIMITED PREFACE Bank is a part and parcel of the modern economy of any country. Like any other countries in the world banks play the most crucial role not in the economic but also the social, political environment in Bangladesh. Even it is wise to say that the financial sector of Bangladesh is solely dominated by the banking sector, because the non bank financial sector of Bangladesh is yet to develop to desired level, although it is growing very rapidly. The invention of banking based on Islamic shariah is a relatively new concept in the global banking arena. Now a day the Islamic Shariah based banks are not operating only in the Muslim countries but also in non Muslim countries with the same level of faith and efficiencies parallel to the conventional interest based banks. Even in some cases some of the Islamic Shariah based banks has exceeded their competing traditional banks in terms of service quality and some other key financial indicators. In Bangladesh Muslim constitutes more than 80% of her total population. These people possess strong faith on Allah and they want to lead their lives as per the instructions given in the holy Quran and Sunnah; the way shown by the prophet Hazrat Muhammad (Sm). But no Islamic banking system was developed here up to 1983. The Traditional banking sector was fully based on interest. This is why most of our religious...

Words: 48877 - Pages: 196

Premium Essay

Investment Management

...1. Log on to and enter the ticker symbol RRD in the Get Quotes box to find information about R.R. Donnelley & Sons. a. Click on Profile. What is Donnelly's main line of business? R.R. Donnelley & Sons Company provides integrated communication solutions to private and public sectors worldwide. It operates through Publishing and Retail Services, Variable Print, Strategic Services, and International segments. b. Now go to Key Statistics. How many shares of the company's stock are outstanding? What is the total market value of the firm? What were its profits in the most recent fiscal year? Shares Outstanding: 199.80M Market Value: 3.28B Recent Gross Profit: 2.33B Profits in the most recent fiscal year => Net Income = $ 211.2 Million c. Look up Major Holders of The Company’s stock. What fraction of total shares is held by insiders? Insider: 1.42% Institutions: 98.30% d. Now go to Analyst Opinion. What is the average price target (i.e., the predicted stock price of the Donnelly shares) of the analysts covering this firm? How does that compare to the price at which the stock is currently trading? Mean Price Target is $23.50. The current price the stock is trading at is $16.44. Therefore the mean price target is higher than its current selling price. e. Look at the company's Balance Sheet. What were Tot Assets at the end of the most recent fiscal year? Total Assets as of Dec 31, 2013: 7,238,200 2. Go to the Securities and Exchange Commission...

Words: 2357 - Pages: 10

Free Essay

Investment Portfolio Management

...|IPM Project Report | | | | | |Investment Portfolio Creation | |using | | | |Investment Philosophy – of Joel Greenblatt’s | |[pic] | | | | | | ...

Words: 6544 - Pages: 27

Premium Essay

Investments and Portfolio Management

...| |Portfolio Management Simulation Project |Performance Evaluation | |Ifaz Khorshed Hassan |Student ID: 22104364 |27/05/2011 Executive Summary This report is based on the ‘Portfolio Management Simulation Project’. It provides an analysis and evaluation of the monthly holding period returns of both managed portfolio and market portfolio of MSCI index, along with the arithmetic average, standard deviation and geometric mean of both sets of date. Methods of analysis include Capital Asset Pricing Model, Sharpe ratio, M2 measure. It also includes regression analysis: coefficient...

Words: 1278 - Pages: 6

Premium Essay

Investment Management Cheet Sheet

... (3) | (4) | (5) | Time until Payment (Years) | Payment | Payment Discounted at 10% | Weight | (1)×(4) | 1 | 60 | 54.55 | 0.0606 | 0.0606 | 2 | 60 | 49.59 | 0.0551 | 0.1101 | 3 | 1060 | 796.39 | 0.8844 | 2.6531 | Column Sum: | 900.53 | 1.0000 | 2.8238 | = k = rf + β [E(rM) – rf ] - The Market consensus estimate of the appropriate discount rate for a firm’s cash flows ∴ 3b. Constant growth no K – Step 1. Find market capitalization rate using CAPM = 0.04 + 0.75 (0.12 – 0.04) = 0.10 Step 2. V0 = D1k - g = $40.10 - 0.04 = $66.67. growth =g = ROE b, where b = plowback ratio and ROE = the rate at which income was generated. 4. Present Value Growth Opportunities – Net present value of a firm’s future investments. E.g. ABC expects to earn $6 per share next year, ROE = 15%, plowback is 60%, market capitalization is 10%. Q: What is PVGO? A: Step 1....

Words: 2265 - Pages: 10

Premium Essay


...solution enabling corporate customers to offer Web and telephone payment capabilities to their clients. ( enable client to be confident ) * World Link Payment Services * Payment can be made in more than 135 currencies through a range of payment options including cash, cross-border Automated Clearing House (ACH), Checks, or electronic fund transfers. * Touch – tone telephone payment application for one – time payment initiation as well as a customer service console to enable payment initiation by an operator. * Offered wide array of Web-based program management tools designed to streamline payment, reporting, spend analysis, global data consolidation, and other critical day – to – day processes. * Enabled corporate customers to receive consolidated spend data for all countries within Asia which could be easily leveraged during supplier negotiations. * Offered an array of integrated investment options through multiple channels, including automatic orders, branch services, and online services. * Promote the E – Workplace DEMOGRAPHIC * More than 90% of all B2B payments made by check 7% automated clearing house (ACH) network Non- Internet system designed to handle large payments The rest using financial Electronic Data Interchange (EDI) services; e.g: Fedwire * Form Financial Settlement Matrix * Company that connected buyers and sellers in E-Market places with payment processing, credit and other services through multiple participating banks...

Words: 1575 - Pages: 7

Free Essay


...industry leader in Ireland and we compete for business on a daily basis with the global investment banks. Our continued success is founded on our ability to attract and retain the best people. If you are considering a career in financial services and you have a strong work ethic, together with lots of ambition, you should consider the Davy Graduate Programme. For our part, we will do our utmost to nurture and develop your talents and will give you the opportunity to work with and learn from the best and brightest people in the business. Davy is a genuine meritocracy and our people are rewarded for their efforts and results in a fair and proportionate manner, regardless of how long they have been with the firm. We are looking for graduates brimming with energy, passion and ambition. If this resonates with you, we look forward to meeting up. Our Story Established in 1926, Davy is Ireland’s leading provider of stockbroking, wealth management, asset management and financial advisory services. Employing over 475 people, we offer a broad range of services to private clients, small businesses, corporations and institutional investors and organise our activities around five interrelated business areas – Asset Management, Capital Markets, Corporate Finance, Private Clients and Research. Fixed Interest Institutional Equity Corporate Broking Money Broking Davy Capital Markets Davy Asset Management DAVY Davy Corporate Finance Corporate Finance Davy Research...

Words: 2668 - Pages: 11

Premium Essay

Historical Costing

... For the past two decades, fair value accounting—the practice of measuring assets and liabilities at estimates of their current value—has been on the ascent. This marks a major departure from the centuries-old tradition of keeping books at historical cost. It also has implications across the world of business, because the accounting basis—whether fair value or historical cost—affects investment choices and management decisions, with consequences for aggregate economic activity. The argument for fair value accounting is that it makes accounting information more relevant. However, historical cost accounting is considered more conservative and reliable. Fair value accounting was blamed for some dubious practices in the period leading up to the Wall Street crash of 1929, and was virtually banned by the U.S. Securities and Exchange Commission from the 1930s through the 1970s. The 2008 financial crisis brought it under fire again. Some scholars and practitioners have connected its proliferation in accounting-based performance metrics to the actions of bankers and other managers during the run-up to the crisis. Specifically, as asset prices rose through 2008, the fair value gains on certain securitized assets held by financial institutions were recognized as net income, and thus sometimes used to calculate executive bonuses. And after asset prices began falling, many financial executives blamed fair value markdowns for accelerating...

Words: 1076 - Pages: 5