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Semester 1 2020 AF208 Major assignment...

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AF208 ASSIGNMENT SEMSTER 1: 2020

Natasha Chand – S11137040 Rahees Khan –s11170619 Siosiua Tuienau –s11102685 Nihal Navneet- s11168811

Table of Contents COMPANY RESEARCH2 EXCUTIVE SUMMARY ……………………………………………………………………………………………………………………….2 INTRODUCTION …………………………………………………………………………………………………………………………………..3 1.0 FIRM ANALYISI…………………………………………………………………………………………………………………………………4 1.1

FIRM BACKGROUND AND NATURE OF BUSINESS.................................................................…..4-5

1.2

INTVESTORS INFORMATION …………………………………………………………………………………………………5-7

1.3

COMPANY RELATED INFORMATION …………………………………………………………………………………….7

2.0 RISK AND PERFORMANCE ………………………………………………………………………………………….………………….8 2.1

RISK PROFILE INFORMATION……………………………………………………………………………………………...9

3.0 COMPARATIVE ANALYSIS INFORMATION …………………………………………………………………………………….10-31 4.0 VALUATION ANLYSIS …………………………………………………………………………………………………………………….1-2 5.0 CONCLUSION………………………………………………………………………………………………………………………………….3 6.0 RECOMMENDATION……………………………………………………………………………………………………………………….4 7.0 BIBLIOGRAPHY………………………………………………………………………………………………………………………………...5 8.0 APPENDIX…………………………...................................................................................................................6

1

EXECUTIVE SUMMARY Since the year 1994, Fiji Television has been providing commercial television services from temporarily established to broadcast the rugby world cup in 1991 before operating properly in 1994. Since then the company has been committed to provide the best content to its viewers from international shows to Main sporting events such as the rugby world cup, FIFA, Boxing and many more. Fiji TV is one of the prominent broadcasters in the region. Communication pacific limited is the subsidiary of the company. This report will be focusing on the nature of operations, evaluate risk profile and also provide analysis on financial and profit ratios of Fiji TV and Flour Mills of Fiji together with the estimate of the company’s development in the market. Through advanced content and growing demand of broadcasting services the company can implement strategies and improvements to attract investors and maximize returns to ensure going concern. Approx: 150 words

2

INTRODUCTION Fiji television Ltd is Fiji’s main television network, it was launched on 15 of June 1994 as the first television broadcasting network in Fiji although there has been a temporary television introduced in October 1991 to show Rugby World Cup and the Cricket World Cup. Fiji TV owns Fiji's premier free-to-view channel (FTA) Fiji One, and formerly the pay TV service, Sky Pacific, which was acquired by Digicel in 2016. Fiji TV also owned subsidiary company Media Niugini Limited, which operates Papua New Guinea's only commercial free-to-view channel, EM TV, but later sold it off to the PNG Government-owned Telikom PNG Limited. Fiji TV's main shareholders are Yasana Holdings Limited, Fijian Holdings Limited, a Fijian investment company owned by the provinces of Fiji, and Hari Punja & Sons Limited, a privately owned investment company. Fiji TV was mention in the South Pacific Stock Exchange as Public Company in 1996.

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1.1 FIRM ANALYSIS 1.2 FIRM BACKGROUND AND NATURE OF BUSINESS Fiji Television Limited is an open organization , Established in 1994 and was recorded on the South Pacific Stock Exchange in 1996 with enlisted office at 20 Gorrie Street, Suva, Fiji. "Itis the holding organization for Fiji TV Group, containing Fiji TV, Media Samoa Limited, and FijiTV (PGN) Limited" (Fiji TV). Fiji Television Limited is the fundamental and driving television broadcaster in Fiji and the Pacific nations, with tasks more than 20 years (Fiji TV, 2017).Hence, Fiji Television Limited, is likewise working a large portion of the allowed to-see stations like business ,live spilling, sports and news through Fiji One. Just as, Fiji TV gives subscription broadcasting administrations in Fiji and other pacific nations, named as Sky Pacific. Thusly, the main investors in the Fiji Television Limited are as per the following, Yasana Holding Limited, FijianHolding Limited and Hari Punja and Sons Limited. Additionally, Fiji Television Limited is an auxiliary tothe Fijian Holding Limited. 1.1 INVESTORS INFORMATION Average Investor in the Firm The table below shows the average investor and number of shareholders in Fiji Television Limited:

Numbe

Name

% Shareholdings

r 1.

FHL Media Limited

61.74

2.

Hari Punja & Sons Limited

22.72

4

3.

Unit Trust of Fiji (Trustee Company) Ltd

4.60

4.

I Taukei Affairs Board

2.46

5.

Dominion Insurance Limited

1.21

6.

Fiji National Provident Fund

0.42

7.

Tejash Manu Bhai Patel

0.39

8.

Praful Patel Investments Pty Ltd < P & A Patel Superfund A/C >

0.33

9.

BSP Life (Fiji) Limited

0.29

10.

Raojibhai Holdings (Fiji) Limited

0.25

11.

Ramesh Chandra Chauhan

0.14

12.

Joseph C P Yee

0.12

13.

Fijicare Insurance Limited

0.12

14.

Cicia Plantation Co-operative Society Ltdg

0.10

15.

Janson Ho Ltd

0.10

16.

P A Lal Holdings Ltd

0.10

5

17.

Vuli Mataitoga

0.10

18.

Grish Maharaj

0.10

19.

J K S Holdings Limited

0.10

20.

Winpar Holdings Limited

0.07

21.

Graham Edee

0.06

22.

Mualevu Koro Investment

0.05

23.

Mualevu Holding Ltd

0.05

24.

Nabalenisiga Holding Limited

0.05

25.

Norman Jary Queen

0.05

26.

Vimal Vijay Govind

0.05

27.

Satriya Prakash and Lalita

0.04

28.

Dhrieadra Pratao

0.04

29.

Ronica Matini Raghwan

0.04

30.

P Meghji & Company limited

0.04

6

31.

Camnira Holding limited

0.04

(Fiji TV Annual Report)

1.2 THEORY OF CAPITAL AND INVESTMENT

Investment and Capital are the two significant term learnt in finance. The Bourdieu's hypothesis of capital propose that capital is any kind of asset that delivers any overflow worth or supplement to a hover of trade. Understand that cash isn't and itself is capital. This can be outlined along these lines in the event that you acquire $100 of benefit and later burn through all the $100, at that point you win zero capital. Be that as it may, in the event that you gain $1000 and burn through $100 on your costs you are left with $900. The $900 is your excess and is viewed as capital. The capital can be contributed to purchase stock that amass more cash consequently.

This hypothesis of capital by Bourdieu can be connected to the above purpose of ventures whereby speculators in Fiji have purchased shares in the FijiTV and holds certain rates of holding in this organization. Consequently, when the organization announces to deliver profit, the investors get a specific level of profit based for their holding of offer.

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2.0 RISK AND PERFORMANCE

2.1 Risk Profile Bill gates said “to win big, you sometimes have to take big risks. That is why Fiji Tv takes big risks because of the high return no matter the uncertainty of the outcome. “A risk profile is an evaluation of an individual's willingness and ability to take risks. It can also refer to the threats to which an organization is exposed. A risk profile is important for determining a proper investment asset allocation for a portfolio.” (Beal, et al., 2007) . However, based on the Fiji tv annual reports, the business is a risk seeker and a risk-neutral because they count the whole risk package as it is a new window of opportunity to increase their investment. According to Fiji tv annual report, 2018, the company and group activities expose them to a variety of systemic risk and un-systemic risks such as market risk (currency risk, interest risk, and equity price risk), credit risk, liquidity risk and other risks such as operational and regulatory risk.

2.2 Risk Performance Fiji Tv 2018, the group, and the company overall use a management program to focus on the unpredictability of the financial market to seek to minimize potential adverse effects on financial performances. Fiji Tv still implementing strategies to ensure that the company value and its entire product are offered still got the eyes of all investors and customers in the local and international world of business.

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Fiji TV risk is coming from changing market prices that affect the income of the company and the holding of it is financial, because of heaps of business transactions dealing with the foreign currencies that are not the company’s functional currencies. For example, strengthening (weakening) of the Fiji dollar against the USD would have decrease/increase the equity and profit or loss by the amount of $114,578(2018) and $114,468(2017). Besides, the risk arises from interest rate include bank overdraft, term loan interest of 3.90%, and finance interest rate of 5%. Any increase or decrease in all interest will affect the net profit and the equity of the company. Moreover, the risk from the unfavorable change of the duty and tax regulation may expose the group to decline its revenue. also, political climate risk because Fiji Tv is operating in two pacific island countries the change of the government policies, they implement can affect the economic situation and the revenue of the group. The other risk will come from the operation of the business, for example, system failure from a cyclone or any Act of God, also a human error, for example, making fake news or updating a piece of wrong information. This will cost the reputation and even up to the financial crisis. According to (Hoggett, et al., 2015) the changing of risk profile is due to the fluctuation of the economic as well as changing government policy and regulations. 2.3 Stock price After comparing the 3 years from 2016 to 2018, 2016 is the highest of the stock price of $2.50 that investor willing to pay for the stock, however, drop in 2017 give us the idea that the worth of the groups and company of Fiji Tv has been decreased. However, it is a piece of good news that the stock price it is up in 2018 of $2.38. Meaning the worth of the Fiji TV is going up due to purchase a million-dollar of equipment to expand the business. Besides, have a high term deposit of 4.9 million in 2018 gives a good reputation for investors to demand more for shares in Fiji Tv. So, based on the increase in shares price in 2018 give the investor’s information that the company is performing well.

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3.0 COMPARATIVE ANALYSIS INFORMATION The table below shows and compares the two companies’ performances the FIJI TV AND FLOUR MILLS OF FIJI Limited. The calculations cover performances on Leverage, Liquidity, Profitability and Market value. Both firms are operating and producing products of similar nature. The FIJI TV is based in Fiji and FLOUR MILLS OF FIJI is based in FIJI also. The competitive market in both these companies is different Table 3.3.1 FIJI TV & FLOUR MILLS OF FIJI 2018 Performanc e Area

FIJI TV

Comparable Company (Flour Mills of Fiji )

Comments

Leverage:

2018

2018

29.31%

6.37%

In this scenario, FMF has a better debt to equity percentage compared to FTV because it has less loan issue in terms of debt repayment and also with lower debt/equity ratio the company is more financially stable. While FTV holds 29.31% of the debt to equity, resulting in increased interest expenses for the business, and more

Debt/Equity (%)

2017 42.71%

2017 15.65%

10

creditor financing is used rather than investor financing.

Debt/Eq ui ty

Percentage

FIJI TV

FMF

42.71 45 40 35 30 25 20 15.65 15 10 5 0 2017

29.31

6.37 2018 Year

Interest Coverage

2018

2018

10.42 times

19.84 times

2017

2017

Fiji TV has a better interest coverage than FMF as FTV can cover more interest expenses with its available earnings whereas FMF covers less interest expense with its available earnings with a lower interest coverage 11

(790.50) times

it can indicate that the company is burdened by the debt expense. Companies need to have enough interest coverage to cover for the unforeseeable future which can hold financial hardships, interest coverage is a very important factor in the return for sahreholders.

27.70 times

Interest Coverage FTV

FMF 0.66

Percentage

0.97 100% 0.03 90% 80% 70% 60% 50% 40%

0.34

30% 20% 10% 0% 2017

2018 Year

12

Liquidity

2018

FMF has a slightly better current ratio than FTV coming in 0.06 times higher which is good but if the current ratio is higher than the industry average it can mean that the management is not using its assets efficiently. Also having a lower current ratio than the industry average leads the company to a higher risk of distress or default.

2018

Current Ratio 2.81 times

2017 4.88 times

2.87 times

2017 2.32 times

13

Current Ratio 6 5 4.88

Percentage

4

2.87 2.81

3 2.32 2 1 0 2017

2018 Year FTV

FMF

Profitability : 14

Profit Margin (%)

2018

2018

7.45%

4.59%

2017 6.07%

2017 8.34%

The profit margin of FTV is higher than that of FMF. This indicates that FTV has a greater percentage of sales revenue after all expenses are paid. Lower profit margin indicates that the profits are low and expenses to high whereby the management needs to cut down on expenses.

15

Profit Margin FTV

FMF

9 8.34 8

7.45

Percentage

7 6.07 6 4.59

5 4 3 2 1 0 2017

2018 Year

16

Return on Assets (%)

2018

2018

10.77%

7.41%

2017

2017

2.27%

12.84%

FTV has a greater asset return which means that company is more asset efficient than FMF. Also FTV is earning more money on less investment compared to FMF.

17

Return on Assets FMF

FMF2

14 12.84 12

10.77

Percentage

10

7.41

8 6 4 2.27 2 0 2017

2018 Year

18

Return on Equity (%)

2018

2018

5.52%

6.34%

2017

2017

3.96%

13.12%

FMF’s return on equity is better than FTV as it has a higher net profit standing. Which also shows that the organization had been using the investor’s fund efficiently. Although higher ratios are always better than lower ratios when compared with other companies it can be different as other companies has separate levels of investors and earnings.

19

Return on Equity FTV

FMF

14 13.12 12

Percentage

10 8 6.34

5.52

6 3.96 4 2 0 2017

2018 Year

Market Value:

Price/Book Value

2018

2018

1.64 times

0.99 times

The Price to Book Value for FTV is higher than FMF. A lower Price/Book Value could mean that stocks are 20

2017 1.68 times

undervalued. With a high P/B Value investors will be attracted as it will have advantages incase the company is liquidated in the unforeseeable future.

2017 1.52times

Price/Book Value FTV

FMF

1.8

1.64

1.68 1.6 1.52 1.4 Percentage

1.2 0.99

1 0.8 0.6 0.4 0.2 0 2017

2018 Year

21

Price/Earning s

2018

2018

29.94 times

24.03 times

2017 32.97 times

2017 7.55 times

FTV has higher amount of P/E than FMF. This can mean that the price of the stock is higher compared to earnings and can be possibly overvalued, also a low P/E would mean that the stock price can be low compared to earnings. Because of growth expectations in the coming future and with the high P/E, the value investors may want to pay a higher amount of share price today.

22

Price/Earnings FTV

FMF

35 32.97 29.94

30

24.03

Axis Title

25 20 15 10

7.55 5 0 2017

2018 Axis Title

23

Dividend Yield (%)

2018

2018

2.94%

1.27%

2017 16.30%

2017 1.65%

The Dividend Yield for FTV is greater than FMF which means that the organization pays its investors a enormous dividend compared to the fair market value of the stock, which means investors are getting paid more for their investments. A low or high rate depends on the industry of the company, investors however look for higher dividend yields.

24

Dividend Yield FTV

FMF

18 16.3 16 14 Percentage

12 10 8 6 4 1.65 2

1.27

0 2017

2018

2.94

Year

25

4.0 VALUATION ANALYSIS For valuation of shares the following is obtained from Fiji TV annual reports; Earnings per share valuation. 2014

2015

2016

2017

2018

FJD 1.17

FJD 1.19

FJD 1.19

FJD 1.42

FJD 1.50

1.88

earning per Share

1.5 1.13 0.75 0.38 0 2014

2015

2016

2017

Figure 4.1

The above graph represents the trend of earnings per share of Fiji TV Limited, from 2014 to 2018. It is would be said that there is an increase in earnings per share from $0.14 to $1.50 which shows that the company is performing well and it shows how the market value of shares has improves also the company has enough profits to distribute to it’s respective shareholders and maintain its confidence in its stakeholders.

Dividend per share

2018

26

Year

2014

Dividend Per Share

$0.40

2015

2016

FJD 0.30

2017 0.45

2018 0.55

$0.30

Figure 4.2 Figure 4.2 depicts the dividend per share...