Fundamental Analysis Project: Australian Real Estate Industry Overview

This project report presents a fundamental analysis of the Australian real estate industry, focusing on ABP Properties Group Limited and AMP Limited. The analysis employs both top-down and bottom-up methodologies to assess the industry's performance and the financial health of the selected firms. The report examines macroeconomic factors like GDP, inflation, and fiscal policies impacting the real estate sector. It also delves into microeconomic aspects, including ratio analysis and DU Pont analysis, to evaluate the profitability, liquidity, and solvency of the companies. The study explores the real estate industry's future projections and overall performance, offering insights into investment feasibility. The report covers key aspects of fundamental analysis, including market factors, industry performance, and the impact of global financial crises. The goal is to provide a comprehensive overview of the Australian real estate market, helping investors make informed decisions about the companies' potential and the industry's prospects.

RUNNING HEAD: Investment analysis 1
Project report

Investment analysis 2
Executive summary:
This report paper has been presented to depict the fundamental analysis concept to the
users. In this report paper, diverse techniques and methods of fundamental analysis have been
examined to evaluate the profitability position and performance of the firm as well as the
industry in which firms are operating their business. For this report paper, Australia real
estate industry has been taken into the context and ABP properties group limited and AMP
limited have been opted as real estate industry firms. Further, many other methods have also
been conducted in this report such as top down analysis and bottom up analysis. These tools
have been used in this report to analyze the performance and profitability position of the
company. Various micro and macro factors of the company has been analyzed in this report.

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Contents
Introduction.......................................................................................................................3
Top down analysis............................................................................................................4
Real estate industry of Australia...................................................................................5
Future projections.........................................................................................................6
Inflation rate..................................................................................................................6
Fiscal policies...............................................................................................................7
GDP..............................................................................................................................7
Bottom up analysis...........................................................................................................8
Ratio analysis................................................................................................................9
ABP property group..................................................................................................9
AMP limited Australia............................................................................................10
DU Pont analysis........................................................................................................11
ABP properties group limited Australia.................................................................12
AMP limited...........................................................................................................13
Financial data analysis................................................................................................14
ABP limited............................................................................................................15
AMP limited...........................................................................................................16
Summary and recommendation......................................................................................17
References.......................................................................................................................18
Introduction:

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It is required for every investor to manage and choose the best portfolio and stock
from the market to manage the invested amount as well as the enhance the return over the
amount. In this study, various tools and techniques which is useful for the investor to invest
the amount has been analyzed and it has been found that mainly 2 techniques are available in
the market, one is technical analysis and another is fundamental analysis. In this research
paper, fundamental analysis has been studied. It has been found in this study that how
fundamental analysis can be useful for the investor to make a better decision.
Top down and bottom up analysis are the most common method of the fundamental
analysis. Fundamental analysis are performed by the investors and analyst to identify the
position, performance and profitability of the company, in this method various aspects which
are related to the company directly or indirectly are analyzed to manage the three P of the
company. While conducting the top down analysis and bottom up analysis, various financial
studies have been done such as DU Pont analysis, ratio analysis and at the same time a study
has also been done over the main elements of the final financial statements, market factors,
GDP, industry performance, fiscal policies, financial crisis etc has been done.
For this paper, real estate industry of Australia and ABP properties group limited and
AMP limited has been taken into the context. Various methods of fundamental analysis and
top down analysis and bottom up analysis has been conducted over the real estate industry to
analyze the feasibility of the company that whether the investor must invest into the company
or not.
Top down analysis:
Further, it has been estimated that the top down analysis is a main part of the
fundamental analysis. Top down analysis depict the analyst about the macro factor of the
industry. This analysis is conducted by the analyst to identify the internal as well as external
factors of the industry. While conducting the top down analysis, various financial studies
have been done such as , market factors, GDP, industry performance, fiscal policies, financial
crisis, economy changes, social causes, corporate responsibilities etc. Further, various other
factors have also been investigated over the companies such as management of the company,
organizational structure, policies of the company, corporate social responsibility, services and
products offered by the industry. This analysis study has been conducted over the companies
and industries to analyze the various aspects related to them and the opportunities which
could be enjoyed by the company (yasin, 2013). Further, the top down analysis help the

Investment analysis 5
analyst to identify the numerous phase of the company and the industry. This analysis is
basically done by the companies to analyze the macro economical factor of the industry.
For this study of the top down and bottom up analysis, real estate industry has been
taken into the context. Further, ABP properties group limited and AMP limited have been
investigated to analyze the micro factors of the industry (Seng & Hancock, 2012). Through
the top down analysis, the performance of the industry and company as well as the
profitability condition of the firm have been analyzed and through this analysis, it has been
investigated that the performance of the industry is good but the firms are not performing
according to the industry standard. Further, the global crisis of the company also depict about
the bad performance of the firms as the real estate industry had been hampered a lot and due
to that the profitability of the company has also been reduced. For this study, fiscal policies,
economical situation, GDP of the country, position of the firm, government interaction etc.
study has been done over both the companies (Krantz, 2016). The main reason behind these
analysis are analyzing the management of the company, organizational structure, policies of
the industry, corporate social responsibility, services and products offered by the industry,
etc.
Real estate industry of Australia:
Real estate industry of Australia has been analyzed to conduct the top down analysis.
For this report, real estate industry, ABP properties group limited and AMP limited has been
investigated. The trends and performance of the industry has been analyzed in this report. it
has been found that how the industry is performing in terms of various financial and
operating situation. This study offers a brief idea to the investor about the condition and
position of the industry and also helps the investor to make a decision about investment into
the company (Nelson, Balakrishnan & Sidhu, 2012).

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(JLL, 2017)
Future projections:
Further, Real estate industry of Australia has been analyzed and it has been
investigated that what are the factors which could make an impact over the future position
and performance of the industry. For this report, real estate industry, ABP properties group
limited and AMP limited has been investigated. The future trends and performance of the
industry has been analyzed. It has been found that how the industry is performing in terms of
various financial and operating situations. This study offers a brief idea to the investor about
the condition and position of the industry and also helps the investor to make a decision about
investment into the company (Benchmark, 2017).
The given graph depict that the performance of the australia has been enahnced and
curerntly company is on 13th position in terms of largest ecpnomies and at the same time it
has also been analyzed that the performance of the coampny has been enahnced from last
year. And thus it has been found that the performanve and position of the industry would be
better in near future and at that time, the return of the stock will also be higher. It has also
projected that the long term invetsment in the coampny would be profiatble for the industry
and this would offer high return to the invetsors but at the same time, risk would also be
higher.
Inflation rate:

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In addition, various other factors which are related to the government and the country
have also even analyzed and found that how the government and the country are trying to
manage the performance of the industry. Firstly, inflation rate of the company has been
analyzed and it has been investigated that the inflation rate of the company is not constant
due to numerous external and internal factors (Seng & Hancock, 2012). Through a report, it
has been found that the various changes have taken place into the performance of the
company. In current quarter, the current GDP of the country has been reduced. This depict
that the country is managing the best to enhance the return and reduce the risk of the stocks.
Fiscal policies:
In addition, various other factors which are related to the government and the country
have also even analyzed and found that how the government and the country are trying to
manage the performance of the industry. Fiscal policies of the company have been
investigated and it has been found that various new policies and strategies have been adopted
by the industry to manage the investment of the company. current government has made
various changes into the fiscal policies and thus the foreign direct investment has been
enhanced in the market but still investor are not investing much into the real estate industry.
GDP:
Lastly, gross domestic product of the country has also been analyzed to understand
the performance of the country. Through the various studies, it has been found that the
economy of the Australia falls under the category of top 20 largest economies and further, it
has also been found that currently Australia is on the position of 13th in largest economies
(Luo, Ghassemlooy, Le Minh, Bentley, Burton & Tang, 2014). But it has also been found that
the share of real estate industry into total GDP of Australia is quite less and this is due to less
attraction of the investors into this industry.

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(benchmark report, 2017)
Bottom up analysis:
Further, it has been estimated that the bottom up analysis is also a main part of the
fundamental analysis. Bottom up analysis depict the analyst about the micro factor of the
company. This analysis is conducted by the analyst to identify the internal factors of the
company. While conducting the bottom up analysis, various financial studies have been done
such as DU Pont analysis, ratio analysis and at the same time a study has also been done over
the main elements of the final financial statements. Further, various other factors have also
been investigated over the companies such as management of the company, organizational
structure, policies of the company, corporate social responsibility, services and products
offered by the company, stakeholders of the company. This analysis study has been
conducted over the companies and industries to analyze the various aspects related to them
and the opportunities which could be enjoyed by the company. Further, the bottom up
analysis help the analyst to identify the numerous phase of the company and the industry.
This analysis is basically done by the companies to analyze the micro economical and
financial factor of the company.
For this study of the top down and bottom up analysis, real estate industry has been
taken into the context. Further, ABP properties group limited and AMP limited have been
investigated to analyze the micro factors of the industry. Through the bottom up analysis, the

Investment analysis 9
performance of the industry and company as well as the profitability condition of the firm
have been analyzed and through this analysis, it has been investigated that the performance of
the industry is good but the firms are not performing according to the industry standard.
Further, the global crisis of the company also depict about the bad performance of the firms
as the real estate industry had been hampered a lot and due to that the profitability of the
company has also been reduced. For this study, DU Pont analysis, income statement analysis,
balance sheet analysis, cash flow analysis, ratio analysis etc study has been done over both
the companies (Lou, Zhang, Zhang, Yao & Xu, 2012). The main reason behind these analysis
are analyzing the management of the company, organizational structure, policies of the
company, corporate social responsibility, services and products offered by the company,
stakeholders of the company etc.
Ratio analysis:
Ratio analysis is the study of bottom up analysis. This study is done by the companies
and the investors to analyze the position of the company in terms of their liquidity, efficiency,
solvency, operations, operating profit, net profit, capital structure etc. this study has been
performed over both the companies of the real estate industry which are ABP properties
group limited and AMP limited. This study offers the great idea to the investors about the
condition of the company and the various changes into the company from last year.
ABP property group:
The first company of Real Estate Company has been evaluated and the ration analysis
has been performed over that company. For this study, ABP properties group limited has
been taken into the context. In this study, various aspects of the company has been analyzed
to identify the liquidity, efficiency, solvency, operations, operating profit, net profit, capital
structure etc of the company (Morote et al, 2013).
Computation of ratio analysis
Liquidity ratio 2016 2015
Current ratio 0.294416244 5.6
Quick ratio 0.269035533 1.666666667
Working capital -139.0 138.0
Profitability Ratios 2016 2015
Operating Profit Margin 1.330396476 0.878504673
Net Profit Margin 1.255506608 0.869158879

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Return on Capital Employed 0.1 0.1
Return on Equity 0.187994723 0.132196162
Return on Total assets 0.116326531 0.087037904
Debt equity ratio
Capital structure ratio 2016 2015
Debt- equity 0.616094987 0.518834399
Interest coverage ratio 8.388888889 4.7
Efficiency ratio
Efficiency ratio 2016 2015
Receivable turnover ratio 21.61904762
Creditor turnover ratio 2.535714286 0.069330766
Inventory turnover ratio 1.154471545 12
Assets turnover ratio 0.098975365
Computation of return on capital invested
Particular 2016 2015
ROCI 24.66666667 15.08704062
Through the above analysis of ratios, it has been found that the liquidity position of
the company has been reduced from the last year and various changes have been made by the
company. Through the analysis, it has been found that the liquid position of the company has
been competitive and company has started using the entire resources. Further, the profitability
position of the company describe that the profitability position of the company has been
improved. Further, the other ratios also depict about the strong performance, capability,
profitability position of the company in the industry.
AMP limited Australia:
The second company of Real Estate Company has been evaluated and the ration
analysis has been performed over that company. For this study, AMP limited has been taken
into the context. In this study, various aspects of the company has been analyzed to identify
the liquidity, efficiency, solvency, operations, operating profit, net profit, capital structure etc
of the company.
Computation of ratio analysis
Liquidity ratio 2016 2015

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Current ratio 0.614141974 3.012356199
Quick ratio -0.97396843 -3.498508735
Working capital -4,180.0 4,723.0
Profitability Ratios 2016 2015
Operating Profit Margin 0.02427644 0.145283569
Net Profit Margin -0.023262104 0.07085581
Return on Capital Employed 0.0 0.0
Return on Equity -0.046100241 0.114097899
Return on Total assets -0.00245609 0.006957368
Debt equity ratio
Capital structure ratio 2016 2015
Debt- equity 17.76976682 15.39957742
Interest coverage ratio 2.162650602 7.117857143
Efficiency ratio
Efficiency ratio 2016 2015
Receivable turnover ratio 1.142415698
Creditor turnover ratio 1.812700207 0.086842846
Inventory turnover ratio 0.888410035 0.905335495
Assets turnover ratio 0.105716165
Computation of return on capital invested
Particular 2016 2015
ROCI -565.2834008 -14709.09091
(Morningstar, 2017)
Through the above analysis of ratios, it has been found that the liquidity position of
the company has been reduced from the last year and various changes have been made by the
company. Through the analysis, it has been found that the liquid position of the company has
been competitive and company has started using the entire resources. Further, the profitability
position of the company describe that the profitability position of the company has been
improved. Further, the other ratios also depict about the strong performance, capability,
profitability position of the company in the industry.
DU Pont analysis:
DU Pont analysis is the study of bottom up analysis. This study is done by the
companies and the investors to analyze the position of the company in terms of their total

Investment analysis 12
profit which has been earned by the company in a fixed time period. this study has been
performed over both the companies of the real estate industry which are ABP properties
group limited and AMP limited. This study offers the great idea to the investors about the
profitability condition of the company.
ABP properties group limited Australia:
The first company of Real Estate Company has been evaluated and the DU Pont
analysis has been performed over that company. For this study, ABP properties group limited
has been taken into the context. In this study, total profit which has been earned by the
company in a fixed time period has been analyzed to analyze the profitability condition of the
company in terms of the equity.
DuPont Model: What
If Analysis
Income
Statement
Sales $227
Expenses
(COGS/Oper.
Exp.) $71
Net Profit
After Taxes
$28
5
Interest Expense $36 divided by
Net
Profit
125.5
5%
Income Taxes
$65,
658 Sales
$22
7 Margi
n
multipli
ed by
ROA
=
11.6
3%
Balance Sheet Sales
$22
7
Current Assets $58 divided by
T.
Asset
0.092
653
Total Assets
$2,
450 Turn
over
Long Term Assets
$2,3
92
R
O
E
mult.
by
19
%
Current Liabilities $197
Total
Liabilities
$93
4
Long Term Debt $1 T. $2,45