[.ACS.]

Hey

Does anyone have an idea of how to compile an equity research buy-sell report? Or know where one can get a general template for one?

I've had a look online but most are pretty dodgy or you have to pay a fortune for. (I'm not looking for any specific buy-sell report, just the template for if you compiled your own.)

Cheers

[Samtheman1]

They are all different depending on the firm. Usually have an opening page summarising the investment case and target price. Then a valuation section detailing how you arrive at your target price. Then a section about the company and the share price triggers. Then financial forecasts.

[crcr]

There are also different kinds of reports i.e. if a company releases a trading update then brokers will usually release a shorter note with no "real information". Usually it tends to be industry/sector reviews that are useful, imo. But basically there is no template because each place has there own. You can get some research stuff from here: http://www.instutrade.com/street/

[.ACS.]

Thanks guys.

I was wondering if you could give me a bit more direction. I'm doing a report on Nokia's financial position and the possibility of it being a recovery story. As such I was wondering how I would systematically go about doing this.

One thing that has grabbed my attention is that the shareholder fund equity for Nokia is different to its equity value. Is this significant? If so could you shed some light into this please?

Also do you have any recommendations on books for interpreting/analysing financial reports?

Cheers.

[crcr]

(Original post by .ACS.)
Thanks guys.

I was wondering if you could give me a bit more direction. I'm doing a report on Nokia's financial position and the possibility of it being a recovery story. As such I was wondering how I would systematically go about doing this.

One thing that has grabbed my attention is that the shareholder fund equity for Nokia is different to its equity value. Is this significant? If so could you shed some light into this please?

Also do you have any recommendations on books for interpreting/analysing financial reports?

Cheers.

I would recommend Business Analysis and Valuation by Palepu. How long do you have though? Being completely honest, if you don't get why shareholder equity and market cap are different you have quite a way to go.

Basically though, I would forget about writing anything like a sell-side report. The simplest way to understand things is to seperate stuff into quantitative and qualitative factors, you don't need to write things this way (although it isn't a bad idea) but it is the best way to think.

The quantitative stuff (i.e. financial statements) should be an analysis of historical statements and a simplified version of IS/BS/CF/key metrics (Margins/Asset Turns/Leverage/Return on Equity) as well as "KPIs" e.g. how many phones they sold or whatever they give in their annual report. The aim here is to highlight how the business works (i.e how it uses assets/margins) and what has happened recently. Obviously, qualitative stuff cannot be ignored on the latter but the aim is to understand what is implied by the current price.
For example, Nokia is planning to cut jobs, is this a good idea financially? More generally, what are Nokia's main costs? Just staff?

Qualitative stuff examines Nokia's general competitive position. This is more difficult but obviously growth of Apple/Android is important, deal with Microsoft, and cheap Chinese phones undercutting core market in China. The basic idea is to fit this with the quantitative stuff. For example, if you think Nokia can maintain, and I am just using random numbers, 10m phones/year is this above what is implied by the current price? Will the company even breakeven at this level?

As Nokia is approaching the level where Net Cash-Total Liabilities > Market Cap then I would say the expectation is that Nokia is going to go out of business soon. About the shareholder equity/market cap, that is just the P/B ratio, on its own, and despite what academics think their backtests show, it means basically nothing in isolation. It is also a very complex figure given the fact that shareholder equity is, largely, an accounting fiction, something that is especially true of tech companies like Nokia. Either way, imo, you need to combine it with return on equity (an equally artificial measure) to understand it properly (and the result is you end up with something like price/earnings).

If you have any more questions, feel free to ask but its a very difficult area. Are you doing this for uni?

[stackemup]

^

Jesus Christ, I want to get into Equity Research, So much to learn.

If you have any more questions

crcr you seem to know quite a bit about equity research. I was wondering whether you can PM me any books/sites/publications for a complete newbie.

Many thanks,

D