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    Finmar Equity Assessment

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    Christen Herce
    The Philippine Stock Exchange (PSE) facilitates buying and selling of securities and provides a venue for companies to raise capital. To list on the PSE, companies must meet certain criteria including a minimum market capitalization of PHP500 million and cumulative profits of PHP50 million over the past three years. Listed companies are subject to disclosure requirements. Valuation methods for stocks include the dividend valuation model using the zero-growth, constant growth, and variable growth approaches as well as free cash flow valuation, book value, and price-earnings multiples. The appropriate valuation method depends on the company and analyzing multiple methods provides a better estimate.

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    Finmar Equity Assessment

    Uploaded by

    Christen Herce
    15 views3 pages
    The Philippine Stock Exchange (PSE) facilitates buying and selling of securities and provides a venue for companies to raise capital. To list on the PSE, companies must meet certain criteria including a minimum market capitalization of PHP500 million and cumulative profits of PHP50 million over the past three years. Listed companies are subject to disclosure requirements. Valuation methods for stocks include the dividend valuation model using the zero-growth, constant growth, and variable growth approaches as well as free cash flow valuation, book value, and price-earnings multiples. The appropriate valuation method depends on the company and analyzing multiple methods provides a better estimate.

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    FINMAR EQUITY ASSESSMENT

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    The Philippine Stock Exchange (PSE) facilitates buying and selling of securities and provides a venue for companies to raise capital. To list on the PSE, companies must meet certain criteria including a minimum market capitalization of PHP500 million and cumulative profits of PHP50 million over the past three years. Listed companies are subject to disclosure requirements. Valuation methods for stocks include the dividend valuation model using the zero-growth, constant growth, and variable growth approaches as well as free cash flow valuation, book value, and price-earnings multiples. The appropriate valuation method depends on the company and analyzing multiple methods provides a better estimate.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    15 views3 pages

    Finmar Equity Assessment

    Uploaded by

    Christen Herce
    The Philippine Stock Exchange (PSE) facilitates buying and selling of securities and provides a venue for companies to raise capital. To list on the PSE, companies must meet certain criteria including a minimum market capitalization of PHP500 million and cumulative profits of PHP50 million over the past three years. Listed companies are subject to disclosure requirements. Valuation methods for stocks include the dividend valuation model using the zero-growth, constant growth, and variable growth approaches as well as free cash flow valuation, book value, and price-earnings multiples. The appropriate valuation method depends on the company and analyzing multiple methods provides a better estimate.

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    Christian Dave H.

    Tadifa
    BSMA 2-1
    Module 6: Equity Securities Market
    Activities/Assessments:
    1. Research on the Philippine Stock Exchange, its functions and its roles in the
    Philippine financial market. Enumerate criteria how companies can list in the PSE
    and the disclosure requirements for listed companies.

    The Philippine Stock Exchange, Inc. (PSE) is a self-regulatory


    organization that provides and ensures a fair, efficient, transparent and orderly market
    for the buying and selling of securities. The Exchange also offers a convenient and
    efficient venue in raising capital to support the growth of businesses (PSE Inc., n.d.).
    Additionally, the primary function of the PSE is to bring together enterprises seeking to
    generate funds through the issuance of new securities thus companies might have
    easier access to funds by listing their shares on the stock exchange. The PSE facilitates
    the sale and purchase of issued stocks and warrants. As a result, these corporate
    activities contribute to economic growth and job creation.
    Furthermore, to be eligible for listing on the Philippine Stock
    Exchange (PSE), a company must meet the following criteria:

     Profits Test. Cumulative consolidated earnings before interest, taxes,


    depreciation, and amortization, excluding non-recurring items, of at least PHP50
    million for three full fiscal years immediately preceding the application for listing
    and a minimum EBITDA of PHP10 million for each of the three fiscal years,
    subject to certain exemptions.

     Market Capitalization Test. Minimum authorized share capital of PHP500


    million, of which a minimum of 25% must be subscribed and fully paid.

     Minimum Number of Shareholders. At least 1,000 shareholders, each owning


    shares equivalent to at least one board lot.

    All other initial requirements are the operating history, minimum free
    float, financial statements, positive shareholders' equity, escrow, lock-up, clearing and
    settlement, and electronic filing of registered securities with the Philippine Depository
    Trust Corp. (PDTC). With that being in the process, all securities must be cleared and
    settled through the Securities Clearing Corporation of the Philippines.
    2. Essay: Discuss each share valuation method and distinguish its differences and
    where and how it should be used.

    The variety of stock valuation methods that are accessible to investors might
    easily overwhelm someone who is choosing one to evaluate a stock for the first time.
    While some valuation techniques are rather simple, others are more intricate and
    difficult. To discuss further those valuation here are some used by many companies.
    First of all, a mathematical procedure called the dividend valuation model leverages the
    prospective value of a corporation to estimate share price via dividend. It is a typical
    instrument used by stockbrokers to forecast the future value of a stock. This strategy
    takes into account all of the stock's information in order to obtain as close as possible to
    a true future value and is frequently accurate enough to be helpful in making decisions.
    Under dividend-based valuation there two model which is widely used by most
    companies, the zero-growth model, constant growth model and variable growth model.
    The zero-growth model which assumes that dividend will not change in the future and is
    used for valuing preference shares. In this model, share value is calculated by dividing
    expected dividend per share at year end by required return. Therefore, the stock price
    would be equal to the annual dividends divided by the required rate of return. It is the
    same formula used to calculate the present value of perpetuity. While constant-growth
    model wherein it is the most popular approach in dividend-based share valuation which
    assumes that dividends will increase at a constant rate indefinitely but always lower
    than the required rate of return. In this model, share value is calculated by dividing
    expected dividend per share at year end by required return less growth rate. This
    method helps investors determine the fair price to pay for a stock today based on future
    dividend payments. Lastly, variable growth model, in which this model assumes that
    dividend may growth at varying rates and may go up or down depending on business
    and economic conditions. In order to capture the variations in growth in the valuation,
    these four steps should be considered. This model is used to determine the intrinsic
    value of a stock based on a future series of dividends that grow at a constant rate.

    Moreover, other alternative valuation methodologies include Free Cash Flow,


    Book Value per Share, Liquidation Value Per Share, Price/Earnings Multiples Method,
    and Share Price. Free Cash Flow is discounted using weighted average cost of capital,
    while Book Value Per Share does not consider future earning potential. Liquidation
    Value per Share is based on the current market value of assets and liabilities, while P/E
    Multiples Method is calculated by multiplying current earnings per share by the P/E
    multiple. Overall, when choosing a valuation method, make sure it is appropriate for the
    firm you are analyzing, and if more than one is suitable use both to arrive at a better
    estimate.
    References:

    About PSE. Corporate. (n.d.). Retrieved February 7, 2023, from


    https://corporate.pse.com.ph/about-pse/

    Quick summary: Philippine Stock Exchange: Cross-border listings guide: Baker mckenzie
    resource hub. Home. (n.d.). Retrieved February 7, 2023, from
    https://resourcehub.bakermckenzie.com/en/resources/cross-border-listings-handbook/asia-
    pacific/philippine-stock-exchange/topics/quick-summary#:~:text=To%20qualify%20for
    %20listing%20with,at%20least%20PHP50%20million%20(approx

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