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Principles of Financial Market Assignment

Added on - 19 Nov 2019

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Fundamental Analysis1Principles of Financial Market
Fundamental Analysis2Executive summaryTop down and bottom down approach play crucial role to manage the project. Whereas, topdown analyses the project by its bigger level and bottom up approach directly focuses on thefinancial performance of a particular organization. This report confers the analysis of Australianreal estate industry comparing two market leader Avjennings limited and Aveo group. From thetop down method evaluates the market growth of the business. In addition to this, Avjenningsand Aveo group contains the small market segment in Australian economy. In this analysis,Australian real estate market is analyzed through comparing the Avjennings and Aveo group. Atthe market situation is favorable for the property business leader.Apart from this, bottom up analysis includes the financial analysis of Avjennings and Aveogroup. Financial position of Aveo group is better than the Avjennings in concern to profit for theyear. In addition to this, liquidity ratio profitability ratio, efficiency ratio, capital structure ratioand market performance ratio has calculated to find out the capacity of both organization throughwhich investors can take a beneficial decision. At the end recommendation is proposed toimprove the market share of organization in Australian real estate business.
Fundamental Analysis3Table of ContentsIntroduction......................................................................................................................................3Industry profile................................................................................................................................4Company profile:.............................................................................................................................4Avjennings Limited......................................................................................................................4Aveo group...................................................................................................................................5Top down analysis of Avjennings Limited and Aveo group...........................................................6Economic analysis........................................................................................................................6Industry analysis..........................................................................................................................7Company Analysis:......................................................................................................................9Bottom-up analysis for Avjennings and Aveo group....................................................................10Liquidity ratio of Avjennings and Aveo group..........................................................................10Profitability ratio:.......................................................................................................................11Efficiency ratio:..........................................................................................................................13Capital structure ratio:................................................................................................................14Market performance ratio:.........................................................................................................15Conclusions:..................................................................................................................................17Recommendations:.....................................................................................................................18Reference:......................................................................................................................................19
Fundamental Analysis4IntroductionThis report includes the top down and bottom down analysis for Avjennings limited and Aveogroup in real estate industry. On the basis of top down model, economic analysis, industryanalysis and company analysis has been discussed. It also focuses on the Australian real estatemarket. On the other hand, financial performance of Avjennings and Aveo group is analyzed todraw an effective decision. Both the organizations are compared on the basis of ratios calculationsuch as liquidity, profitability and market performance.
Fundamental Analysis5Industry profileReal estate industry of Australia is increasing very rapidly and it is the most attractinginvestment sector in the country. It is a major contributor in the Australian economic growth ascompare to the other sectors. On the basis of market research it is reviewed that real estatemarket has doubled in last 10 years. In addition to this, this industry contains 8% of market inAustralia. At the same time, this industry came out as the largest sector in the market to take overthe mining and financial industry. Further, it contributed with 11.5 % in Australian GDP which isaround $182.5 billion of national economy (Report Linker, 2017). It is a positive indicationbecause of the development of economy and it has created more job opportunities in the market.Moreover, this industry is paying highest tax to the Australian government.Company profile:Avjennings LimitedAvjennings is leading real estate organization which deals in residential property development inAustralia. In addition to this, it offers land, towns, apartment and property investment to thecommunity. It is providing housing development service to the Australian market since last 80years. At the same time, the financial position of the company is strong as per the performance inlast decade. Avjennings generated sales of A$421.88 million for the year 2016 and it is thedouble growth rate as compare to year 2015 (Su, R2015). It captured the market cap as 226.81million and net income as 40.91 million in year 2016. Moreover, it is operated in diverse rangeof products in real estate such as buying, selling and construction but its major income source ishousing development. Avjennings ltd employed 457 people in this organization to deliver the
Fundamental Analysis6unique service to the community. Many institutional shareholders hold the share in company likecolonial first state asset management, dimensional fund advisors and perennial investmentpartners with 12.97%, 1.95% and 9.22% respectively (financial times, 2017).Aveo groupAveo group is an organization which deals in property investment, asset management propertydevelopment and in construction of apartment in Australia. Headquarter of this group is locatedin Sydney, Australia under the supervision of CEO Geoffrey Earl Grady. Further, it is operatedin two different segment of as per the nature of people such as retirement and non- retirement.The market cap of this company is underlined as $1.92 billion in fiscal year 2016 (Aveo, 2016).At the same time it employed 1640 people in organization to care the retired people for villagecommunity and for development of residential commercial and retail property. Many substantialshareholders invested in FKP group such as Mulpha international group, perpetual limited andvinva investment with the holding as 22.60%, 10.30% and 5.06% respectively. Aveo groupearned the profit of 89.0 million in year 2016.
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