You are a new stock analyst in XYZ research house. You are required to write a report of your target firm GWA Group Limited (ASX code: GWA) to initiate the coverage of the company. The report should be about the fundamental analysis of this firm, including the firm’s financial statements analysis, industry analysis, strategy analysis, financial performance analysis, and your analysis of the current financial status in this firm and your expectations of the future financial status in this firm.
This assignment is more of a test for the understanding of the process rather than just the final conclusion.
In this report, you should cover the following five aspects:
Based on the financial data of the target firm and the other firms in the same industry from the fiscal year 2017 to 2022:
1, Financial Statements Analysis: What are the key items that investors should pay attention to when reading the financial statements of this firm?
You are expected to read the financial statements of this firm in 2019 (before covid). Only three financial statements: Statement of financial position (i.e. Balance Sheet), Statement of profit or loss (i.e. Income statement), and Statement of Cash Flow(i.e. Cash flow statement) are required to analyze in 2019. For each type of statement, please list the specific account/item that you suggest investors pay attention to and explain the reasons. To explain the reasons, you are expected to provide at least one of the trend /common-sized/benchmark financial statement analyses.
2, Industry Analysis: What is the overall competition status in this industry? And what is the position of your target firm in this industry?
You are expected to use Porter’s five forces to help you analyse the competition status and find the position of the target firm in the competition. Please provide the related financial or economic data to support your argument in this part. The economic or financial data you could use are not restricted to the period 2017 to 2022.
3, Company Strategy Analysis: What is the strategy of your target firm?
You are expected to describe the company’s strategy compared to the other firms in the same industry from finance perspective. Due to Covid impact, your company strategy analysis should provide financial ratio analysis based on the data from the fiscal year 2017 to 2019 to support your argument.
4, Financial Performance Analysis: What is the current financial status of this firm? Whether this company has successfully implemented the company strategy since 2020?
You should analyse the current financial status of this target firm for the period 2020 to 2022 from the following aspects: the operating profitability and the operating efficiency. You should compare the current financial status of this firm with the prior financial status and comment on whether this firm has successfully implemented the strategy that you have identified in question 3 since 2020 (the covid period). You are expected to summarize what are the key points (strengths and weaknesses) that lead to the successful or unsuccessful implementation of strategy in this firm.
5, Conclusion: What is your expectation of future financial status in this firm? Do you think the company should stick to or change the strategy in the future?
