Optimity'21 Case, 2nd Round

1. Round 2: Wage A War

2. You are the Chief Investment Officer (CIO) of Optimity Asset Management Company (AMC). Your company’s mutual fund - Optimity Bangladesh Mutual Fund – has investment in
British American Tobacco Bangladesh Company Limited (BATBC). You recently attended the investment committee meeting where the committee members decided to reassess
the investment in BATBC. The investment committee wants to know whether the Mutual Fund should invest more in BATBC (BUY Call) or hold the current investment position
(HOLD Call) or take exit from the investment (SELL Call). As the CIO of the AMC, you are responsible to assess the fair value of the stock and determine whether it is a “BUY” or
“HOLD” or “SELL” call as per the company policy.
Rating methodologies as per the company policy are given below -
Rating Expected Return (Annualized)
Buy: More than 15%
Hold: 0% to 15%
Sell: Below 0%
Follow the following instructions carefully –
• Forecast at least next 5 years’ Income Statement, Cash Flow Statement (Indirect method) and Balance Sheet for the company.
• Use Discounted Cash Flow (DCF) method to value the company.
• Use relevant Relative Valuation (Justified P/E) method to value the company.
• Use at least 2 valuation methods to value the stock.
• Use equal weight for each of the valuation methods to find the fair value of the stock as of 31st December 2021.
• Calculate the expected return based on the stock’s closing price of October 30th 2021 at Dhaka Stock Exchange.
• Calculate some relevant ratios to explain your recommendation (Buy, Hold or Sell).
• We have attached a sample valuation file for your convenience. Your valuation assumptions can be simpler than that of the sample file. Work on a new excel file (not the
sample model we provided) and make your own assumptions.
• Rename your files as TeamXYZ_Round Two_Optimity 2021.