OK - I'm glad you sent this in to me and I got to read it.   You have a well-written paper here, but it needs some editing to get it into the proper format.  Here are my suggestions, in no particular order. 1.  You need to have a labelled Introduction, Discussion and Conclusions Section. 2.  Your first paragraph is great as the beginning of the Discussion.  Now I want you to write an Introduction.  Briefly introduce the topic.  Give me a couple of statistics, for example.  Then go on to state what the focus of the paper will be (for ex.  This paper will give an overview of the process by which nuclear energy is generated and then discuss some the risks and benefits of this type of energy.) 3.  There are  couple of grammar mistakes (missing prepositions is what I noticed). Pretty good though. 4.  The last paragraph can work as the conclusion.   I want you to start it out, however, with a couple of sentences of summary (This paper has shown...) 5.  Lastly, you need to have and use 4 sources!  You lose big points for not having at least four. Since this is getting to you so late, you can have an extra day to turn it in.  I am hoping to grade them all over the weekend, though, so please, please turn it in by close of business Saturday. Project Description: REIT INDUSTRY , STARTHILL GLOBAL Stock code: P40U.SI 1) GO TO YAHOO FINANCE.SG AND RETRIEVE THE 60 MONTHLY ADJUSTED CLOSING PRICES OF STARHILL GLOBAL 01 JUNE 2008 TO DEC 2012 2) REPEAT THE ABOVE STEP FOR STI (STRAITS TIMES INDEX) WHICH WILL BE OUR MARKET PROXY 3) FIND A CLOSE COMPETITOR/ PEER TO STARHILL GLOBAL. USE SUNTEC REIT. 4) GATHER THE LAST 5 YEARS (2008-2012) FINANCIAL STATEMENTS FOR BOTH STRARHILL GLOBAL AND SUNTEC REIT AND DO A 3 STEP DUPONT ANALYSIS ON BOTH. MAKE COMPARISON WITH RELVANT COMMENTS! OBJECTIVE OF THIS PROJECT: TAKING 7 AUGUST 2013, STARHILL GLOBAL CURRENT PRICE OF $, OUR ROLE IS TO DETERMINE AND FORECAST A 12 MONTH PRICE TARGET FOR STARHILL GLOBAL. WHY DO A VALUATION PROJECT. • BEING ABLE TO VALUE SOMETHING (A FINANCIAL ASSET IN THIS CASE) IS AN IMPORTANT SKILL SET. • THE PROJECT WOULD TAKE YOU THOROUGH THOUGHT PROCESS TO SHARPEN YUR ANALYTICAL (BOTH QUANTITATIVE AND QUALITATIVE) AND FORECASTING SKILLS. • MOST IMPORTANTLY, A VALUATION PROJECT IS NOT JUST A NUMBER CRUNCHING EXERCISE! • GIVE AN INDUSTRY OVERVIEW AND IDENTIFY THE KEY DRIERS SPECIFIC TO THE INDUSTRY N GIVE AN OVERVIEW OF THE FIRM’S BUSINESS LINES AND ITS CHARACTERISTICS -10% • 1) ESTIMATE BETA USING 60 HISTORICAL MONTHLY DATA POINTS FOLLOWED BYBETA ADJUSTMENT 2) ESTIMATE EXPECTED MARKET (STI) RETURNS IN 2013 3) PICK RISK FREE RATE 4) ESTIMATE REQUIRED RATE OF RETURN 1-4: 10% • PERFROM A 3 STEP DUPONT ANALYSIS ON THE FIRM AND COMPARE IT WITH ITS PEERS – 10% • FROM THE ANALYSIS OF THE ECONOMY, INDUSTRY IDENTIFY THE KEY DRIVERS (BOTH POSITIVE AND NEGATIVE) THAT WILL HAVE AN IMPACT ON THE FIRM WITH REGRADS TO: -10% 1) FUTURE REVENUE/ SALES (IF APPLIC.

1. OK - I'm glad you sent this in to me and I got to read it. You
have a well-written paper here, but it needs some editing to get
it into the proper format. Here are my suggestions, in no
particular order.
1. You need to have a labelled Introduction, Discussion and
Conclusions Section.
2. Your first paragraph is great as the beginning of the
Discussion. Now I want you to write an Introduction. Briefly
introduce the topic. Give me a couple of statistics, for example.
Then go on to state what the focus of the paper will be (for ex.
This paper will give an overview of the process by which
nuclear energy is generated and then discuss some the risks and
benefits of this type of energy.)
3. There are couple of grammar mistakes (missing prepositions
is what I noticed). Pretty good though.
4. The last paragraph can work as the conclusion. I want you
to start it out, however, with a couple of sentences of summary
(This paper has shown...)
5. Lastly, you need to have and use 4 sources! You lose big
points for not having at least four.
Since this is getting to you so late, you can have an extra day to
turn it in. I am hoping to grade them all over the weekend,
though, so please, please turn it in by close of business
Saturday.
Project Description:

2. REIT INDUSTRY , STARTHILL GLOBAL Stock code:
P40U.SI
1) GO TO YAHOO FINANCE.SG AND RETRIEVE THE 60
MONTHLY ADJUSTED CLOSING PRICES OF STARHILL
GLOBAL 01 JUNE 2008 TO DEC 2012
2) REPEAT THE ABOVE STEP FOR STI (STRAITS TIMES
INDEX) WHICH WILL BE OUR MARKET PROXY
3) FIND A CLOSE COMPETITOR/ PEER TO STARHILL
GLOBAL. USE SUNTEC REIT.
4) GATHER THE LAST 5 YEARS (2008-2012) FINANCIAL
STATEMENTS FOR BOTH STRARHILL GLOBAL AND
SUNTEC REIT AND DO A 3 STEP DUPONT ANALYSIS ON
BOTH. MAKE COMPARISON WITH RELVANT COMMENTS!
OBJECTIVE OF THIS PROJECT: TAKING 7 AUGUST 2013,
STARHILL GLOBAL CURRENT PRICE OF $, OUR ROLE IS
TO DETERMINE AND FORECAST A 12 MONTH PRICE
TARGET FOR STARHILL GLOBAL.

3. WHY DO A VALUATION PROJECT.
• BEING ABLE TO VALUE SOMETHING (A FINANCIAL
ASSET IN THIS CASE) IS AN IMPORTANT SKILL SET.
• THE PROJECT WOULD TAKE YOU THOROUGH
THOUGHT PROCESS TO SHARPEN YUR ANALYTICAL
(BOTH QUANTITATIVE AND QUALITATIVE) AND
FORECASTING SKILLS.
• MOST IMPORTANTLY, A VALUATION PROJECT IS NOT
JUST A NUMBER CRUNCHING EXERCISE!
• GIVE AN INDUSTRY OVERVIEW AND IDENTIFY THE
KEY DRIERS SPECIFIC TO THE INDUSTRY N GIVE AN
OVERVIEW OF THE FIRM’S BUSINESS LINES AND ITS
CHARACTERISTICS -10%
• 1) ESTIMATE BETA USING 60 HISTORICAL MONTHLY
DATA POINTS FOLLOWED BYBETA ADJUSTMENT
2) ESTIMATE EXPECTED MARKET (STI) RETURNS IN 2013
3) PICK RISK FREE RATE
4) ESTIMATE REQUIRED RATE OF RETURN

4. 1-4: 10%
• PERFROM A 3 STEP DUPONT ANALYSIS ON THE FIRM
AND COMPARE IT WITH ITS PEERS – 10%
• FROM THE ANALYSIS OF THE ECONOMY, INDUSTRY
IDENTIFY THE KEY DRIVERS (BOTH POSITIVE AND
NEGATIVE) THAT WILL HAVE AN IMPACT ON THE FIRM
WITH REGRADS TO: -10%
1) FUTURE REVENUE/ SALES (IF APPLICABLE)
2) FUTURE EXPENSES (IF APPLCABLE)
3) CAPEX (IF ANY)
1) FUTURE GROWTH RATE, HENCE
2) FUTURE EARNING, HENCE
HENCE:
1) AFFECTING THE RISKNESS OF THE

5. STOCKRECALIBRATE BETA),
2) AFFECTING FUTURE DIVIDENDS PAYOUT
• USING CASH FLOW VALUATION TECHNIQUES. -20%
1) USE DDM TO ESTIMATE THE 12 MONTH PRICE
TARGET
2) USE FCFE TO ESTIMATE THE 12 MONTH PRICE
TARGET
• USING RELATIVE VALUATION TECHNIQUES. -20%
1) USE P/E AND COMPARE TO PEER
2) USE P/B AND COMPARE TO PEER
• ASSESS AND CONCLUDE SUITABILITY OF ABOVE
VALUATION TECHNIQUES WITH RELATION TO
COMPANY ANALYSED N CONCLUDE AND TAKE A
STAND ON THE 6 MONTH TARGET PRICE -10%
• OVERALL PRESENTATION, CLARITY OF WRITING AND
EXPRESSION. USE OF APPROPRIATE FIGURE, CHARTS. N
MOST IMPORTANTLY FOLLOW BY A EXECUTIVE

6. SUMMARY -10%
This Report writing must have low plagerism when it comes to
turn it in. It must be written in good english for understanding.
ADCORPAUSTRALIA
LIMITEDCOMPANY
VALUATIONREPORT
Prepared by: Andrew Farrugia,
Yangsi Zhao and Guillaume Tsao Yee Kwai Pun
BAF I 10 42 -
Inve st ment
AAUCompanyValuationReport Page1
Executive Summary

7. Adcorp Australia Limited (AAU) was founded in 1981 in NSW
and listed on the Australian Security
Exchange in 1999. Today, AAU is one of the leading locally
owned companies in the media industry
in Australia and New-Zealand. Their main operations include
advertising agency services, website
design and development and digital marketing services. They
have segmented their activities into
retail, motor vehicles, real estate, government and employment.
The financial analysis has shown that AAU’s performance has
highly fluctuated over the 5 year
period (2007-2011). However, they were not performing
poorly. Rather, they had more expenses
due to restructures and acquisitions. Furthermore, the 2008
Global financial crisis deeply impacted
all their target markets thus reducing their sales. The Dupont
analysis has shown that AAU best
performed financially in 2008 and that in the recent year 2010
incurred a loss due to strategic
repositioning. They saw a growth in all their ratios in 2011.
The valuation analysis consisted of the application of five
models, namely: Dividend Discount Model,
Free cash flow model, Price earnings ratio, Price over book
value ratio and Net tangible asset backing

8. model. We found that the latter model was more appropriate for
this situation although the
outcomes were similar. Overall, our findings have shown that
AAU stock is undervalued.
AAUCompanyValuationReport Page2
Table of Contents
Executive Summary
...............................................................................................
.............................. 1
1. Company Analysis
...............................................................................................
............................ 5
1.1 Overview
...............................................................................................
.................................. 5
1.2 History
...............................................................................................
...................................... 5
1.3 Share Price Performance
...............................................................................................
......... 6

9. 1.4 Products and Services
...............................................................................................
.............. 8
1.4.1 Advertising Agency Services
............................................................................................ 8
1.4.2 Website Design and Development
................................................................................. 8
1.4.3 Digital marketing Services
...............................................................................................
8
2. Financial Analysis
...............................................................................................
............................. 9
2.2 Dupont Analysis
...............................................................................................
..................... 10
5 Year Extended DuPont Analysis
...............................................................................................
.. 11
2.2.1 EBIT/Sales
...............................................................................................
....................... 12
2.2.2 Sales/Total Assets
...............................................................................................
.......... 12
2.2.3 EBIT/Total

10. Assets.....................................................................................
...................... 12
2.2.4 Interest Expense/Total Assets
....................................................................................... 12
2.2.5 Net Before Tax/Total Assets
......................................................................................... 13
2.2.6 Total Assets/Common Equity
........................................................................................ 13
2.2.7 Net Before Tax/Common Equity
................................................................................... 13
2.2.8 Tax Retention
...............................................................................................
................. 13
2.2.9 Return on Equity (ROE)
...............................................................................................
.. 14
3. The Economic Environment
............................................................................................ ...
... 14
3.2 Overview
...............................................................................................
................................ 14
3.3 Macroeconomic indicators
...............................................................................................
.... 15
3.3.1 Inflation

11. ...............................................................................................
.......................... 16
3.3.2 Interest Rates
...............................................................................................
..................... 17
3.3.3 Consumer Confidence
...............................................................................................
........ 18
3.3.4 Economic Outlook
...............................................................................................
.............. 19
3.4 The Australian media industry
...............................................................................................
... 20
3.4.1 Overview
...............................................................................................
............................ 20
3.4.2 Market Segmentation
...............................................................................................
........ 21
3.4.3 Level of Debt
...............................................................................................
...................... 21
3.4.4 Organizational Goals
...............................................................................................
.......... 22

12. AAUCompanyValuationReport Page3
3.4.5 Key Competitors
...............................................................................................
................. 23
4. Valuation Assumptions
...............................................................................................
.............. 24
Required rate of Return(CAPM)
...............................................................................................
......... 24
Risk-free rate (Rf)
...............................................................................................
........................... 24
Market returns (Rm)
...............................................................................................
...................... 24
Market risk premium (Rm-Rf)
...............................................................................................
........ 24
Beta (β)
...............................................................................................
........................................... 24
Required Rate of Return (CAPM) Calculation:
.............................................................................. 25
4.2 Valuation Analysis

13. ...............................................................................................
.............. 25
4.2.1 Dividend Discount Model (DDM)
.................................................................................. 25
4.2.2 Dividend Forecast
...............................................................................................
.......... 26
4.2.3 Intrinsic Share Price
...............................................................................................
....... 28
4.2.4 Sensitivity Analysis
...............................................................................................
......... 28
4.3 Free cash Flow to Equity Model
.............................................................................................
30
4.3.1 Cash Flow
Forecast..................................................................................
............................. 30
4.3.2 Sensitivity Analysis
...............................................................................................
......... 32
4.4 Price earnings ratio
...............................................................................................
............ 33
4.4.1 Sensitivity analysis
...............................................................................................

14. ................ 34
4.5 Price/Book Value ratio (P/B)
.............................................................................................
34
5. Evaluation of value/price of the company
............................................................................ 36
6. References
...............................................................................................
............................. 37
7. Appendices
...............................................................................................
..................................... 39
Appendix 1: Beta calculation of AAU with ASX 200 index
................................................................ 39
Appendix 2: Dividend forecast (DDM)
..............................................................................................
45
Appendix 3: DDM Beta and Risk Premium Sensitivity
...................................................................... 46
Appendix 4: Dividend Growth Rate Sensitivity
................................................................................ 46
Appendix 5: Historical FCFE Growth rate
.......................................................................................... 46
Appendix 6: Operating expenses history
.......................................................................................... 47

15. Appendix 7: AAU’ share price FCFE model
....................................................................................... 47
Appendix 8: discount sensitivity
...............................................................................................
........ 47
Appendix 9: FCFE growth rate sensitivity
......................................................................................... 48
Appendix 10: P/E Ratio forecast 2013
..............................................................................................
48
Appendix 11: AAU book share value 2007-2011
.............................................................................. 48
Appendix 12: STW book share value 2007-2011
.............................................................................. 48
AAUCompanyValuationReport Page4
Appendix 13: DIG book share value 2007-
2011................................................................................ 49
Appendix 14: AAU NTA Backing Model history
................................................................................ 49
Appendix 15: STW NTA backing Model history
................................................................................ 49
Appendix 16: DIG NTA Backing Model history
.................................................................................. 49

16. AAUCompanyValuationReport Page5
1. Company Analysis

17. 1.1 Overview
Adcorp Australia Limited (AAU) is an Australasian company
competing in the media industry. Their
headquarters are based in Sydney and they have offices across
Australia and New Zealand. They are
the leading locally owned communications group as well as the
largest supplier of non-campaign
advertisement to local, state and federal government (AAU
Annual Report 2011)
AAU provides tailored marketing solutions to various
organisations through specialized entities.
Their services encompass, but are not limited to, advertising,
branding, PR, consultancy, marketing
research, marketing strategy and management. These are
divided into three broad categories:
advertising agency services, web design and supplier of web-
based products. AAU specialises in
employment marketing, government advertising, real estate,
retail and motor vehicles.
1.2 History
Adcorp Australia Limited was founded in Sydney, New South
Wales, in 1981 initially as Pabiko Pty Ltd,
later the same year they changed the company’s name to Adcorp
Australia. They commenced

18. operating in the recruitment sector through the development of
an advertising website in 1995.
Three years later, in 1998, AAU expanded its operations to
Auckland, New Zealand. Finally in 1999,
the company, along with the acquisitions of Employment
Opportunities from Australia Pty Ltd,
Meniscus Technology Pty Ltd and 50% interest in CareerMatch
Pty Limited, was listed in the
Australian Security Exchange as Adcorp Australia Limited
(IBIS World 2011).
In 2000, AAU saw its net profit after tax increase by 9.8% to
$5.724 million (AAU AR 2000). It also
obtained an exclusive license and minority equity from the
American based company Recruitment
Solution
s International Corp. (AAU AR 2000). This allowed AAU to use
the software in Australia and
New Zealand and also allowed them to buy more equity in the
licenser company in the future (AAU

19. AR 2000). During that same year, they purchased the remaining
50% interest in CareerMatch Pty
Limited and acquired Lewis Advertising Limited- New
Zealand’s second largest specialist recruitment
advertising agency (IBIS World 2011).
AAUCompanyValuationReport Page6
Adcorp Australia Limited’s company history is filled with
acquisitions. In 2001, the company acquired
Raisin & Lines Advertising Pty Ltd and expanded its activities
to South Australia through the
acquisition of Iceberg Media a print advertising client base
agency (AAU AR 2001). AAU undergoes
further diversification by acquiring leading retail motor vehicle
advertising agency Donald & Donald

20. and boutique creative design company Green Advertising in
2002 (AAU AR 2002). Furthermore, AAU
successfully obtains a license agreement with News Interactive
for the management of the
recruitment website CareerOne (AAU AR 2002). Despite an
increase in profits between financial
years 2002 and 2003, Adcorp kept a low profile in terms of
mergers and acquisitions in order to
better manage the several companies already acquired in the
past few years (AAU AR 2003).
In 2005, the company resumed its acquisition strategy- after two
years of internal growth and
increasing profits- lead by new CEO Peter James (AAU AR
2005). These acquisitions consisted of
dmark, Streetwise and Cuttriss Dye which complemented their
existing portfolio (AAU AR 2005; AAU
AR 2006). In 2006, although their financial performance proved

21. poorer, the company still added
Andrews Advertising to their portfolio (AAU AR 2006). In the
following years Adcorp Australia
Limited took over Quadrant Creative Pty Ltd and founded Kelly
Street Digital Pty Ltd in 2007 and
increased its ownership in Andrews Advertising Pty Ltd to 75%
in 2008 (IBISWorld 2011).
In 2009, following the Global Financial crisis, AAU sold off
Kelly Street Digital Pty Ltd and incurred an
operating loss during the financial year 2010/2011 (IBISWorld
2011; AAU AR 2011). The event that
marked 2010 the most was the expansion of their activities in
the Northern Territory, obtaining the
NT government as a new client (IBISWorld 2011). Despite new
customers, the crisis severely
impacted Adcorp Australia Limited reducing their profits and
causing the loss of their clients in 2011

22. (AAU AR 2011). The new market conditions have caused
Adcorp Australia Limited to now review its
strategy and plan a repositioning of the company (AAU AR
2011).
1.3 Share Price Performance
The following charts show the fluctuations of Adcorp Australia
Limited’s share prices against all
ordinaries in the ASX. The first chart (figure 1) shows the
historical share price performance over 10
years- from September 2002 to September 2012- so as to
observe the company’s share price
performance prior to and after the GFC. It can be seen that prior
to early 2005, AAU’s share price
performance was well above the all ordinaries index, with a
share price estimated at $1.2. From
2005 onwards, the share price drastically depreciates and

23. sustains a downward trend against market
expectations as seen in Figure 1. The most significant drop
occurs in the first half of 2005, the
disparity between the all ordinaries index and AAU’s share
price performance can especially be
observed in the period January 2006 to December 2007. In that
period the All Ordinaries Index
AAUCompanyValuationReport Page7
indicate very favourable market conditions, however, AAU’s
share price performance depreciates
instead. The performance of AAU’s share price follows the All
Ordinaries Index with peaks and
troughs but not to the same extent (e.g. early and mid 2008).
Following the GFC in the second half of

24. 2008, AAU’s share price experiences another significant drop in
early 2009, however not as much as
the All Ordinaries Index in that same time frame.
Figure 2 is a chart representing the recent share price
performance of Adcorp Australia Limited over
the past year between September 2011 and September 2012. As
can be observed, AAU’s share price
has highly fluctuated over the past year with a lowest price of
$0.150 in September 2012 and a peak
of $0.215. It has somewhat followed the market trend as the
prices appreciations and depreciations
coincide with the All Ordinaries index. It is also observed that
the share price experience some
stability during the period December 2011 and August 2012,
with the prices not falling below $0.166
and following a minor upward trend.

25. AAUCompanyValuationReport Page8
1.4 Products and Services
1.4.1 Advertising Agency Services
AAU’s advertising agency services are one of their main
activities and represent the majority of their
revenue. They specialise in human resources, government,
retail, motor vehicle and education (AAU
AR 2011). Adcorp Australia Limited has first started as a
human resources advertising company, it is
safe to say they are they are experts in that field managing
websites such as CareerOne. Between
2001 and 2005, they began diversifying into other sectors as
employment in Australia was facing

26. slower growth (AAU AR 2005). The very recent obtention of
the Northern Territory as a customer
completes their customer portfolio in the governmental sector.
Website Design and Development
1.4.2 Website Design and Development
They developed their first website for recruitment advertising in
1995. Since then they have
obtained licenses from external companies to operate similar
websites locally -CareerOne and
Recruitment