June 22, 2015 at 6:27 pm
M.Iqbal – OBU Registered MentorParticipant
@montelik. Using the group figures might not give you a proper comparability due to acquisitions. As trephena mentioned in that case you will have to mention the limitations.
I would suggest using the individual company figures for two reason; firstly that it would be more easier to deal with and less stressful which might actually mean that the quality of your analysis is more thorough and reassuring, secondly if these two groups have some non overlapping business interests then your comparison would not really be of much value but using individual companies would surely mean that you have made sector specific comparison which is not only more meaningful but would also add value to your RAP.June 22, 2015 at 11:04 pm
@M.Iqbal. Okay. Thanks for the explanation.July 12, 2015 at 9:14 am
i have chosen a tobacco company as my project analysis.how to move about it? ratio,pestel,graphs and comparator informationAugust 10, 2015 at 2:37 pm
my comparator company has reported loss still its second by market share?is their any problem choosing it my comparator company?August 12, 2015 at 8:38 am
@alysyyed – The loss itself is not so important as the actual reasons behind it. Remember the PEST(LE) factors for both companies will be similar if operating in the same country. So you need to find out why it makes the loss. May be interesting to investigate whether it has a parent company and whether the operating loss is one of those ‘fixes’ by the holding company used to minimise tax via transfer pricing and the like. Consider what the impact is on dividends too and investors (if it is mainly owned by a holding company then the negative EPS does not affect many investors of the subsidiary company for example).
As with all T8s it is why something has happened and strategic decisions that lie behind this you need to explain rather than just commenting on the basic differences in the ratio percentagesSeptember 13, 2015 at 3:02 am
Hi , I wanted to base my RAP on Ryanair and ideally Easyjet as the comparator but seeing as the currencies are different I won’t use Easyjet as I intend doing a deep dive on revenue analysis.If i had to use Wizz air instead as comparator would that matter?Wizz Air is an upcoming low cost carrier.In terms of business models, would you advice SWOT and Porters or Pestel and porters or all 3 models for low cost carriers.Please advice, appreciate the help.
Kelly AnnaSeptember 13, 2015 at 10:01 am
This question has been asked before on ‘Topic 8 Problems with Financial Statements’ and my answer is reproduced below. You will see that comparing Ryanair with Easy Jet is not a problem. (May I suggest Kelly Ann that if you need to open a new topic then you should be more specific as Topic 8 is too generalised as T8 already has hundreds of sub-headings – so either our search facility or going to pages 2 or 3 may reveal a similar generic topic title)
“This is not an issue as you should be working mainly in ratios. The only times you might use absolute figures is when discussing revenue and even then it is the year on year increases that are most significant, or share prices. With the latter it is the importance of the effect of performance on share price where you should be focussing. So don’t feel you have to translate currencies as it is unnecessary – there are ways round this and arguably translation does not add anything and probably masks some factors. As I keep trying to tell students it is not the numbers and percentages themselves that matter but their significance”.September 13, 2015 at 1:46 pm
Thank you Trephena, much appreciate your advice.I will for future be more specific when I start a new topic?I was concerned as I wanted to do a revenue analysis by geography and thought the graph may be distorted due to different currencies…With regards to the graphs, I would obviously need to bring in the competitor as well,would I need to also need to take into account 3 year revenue/profit/costs of the comparator to plot on a graph simultaneously with main company?I have not seen this question asked with regards to graphs.I also found the answer in the suggested models to use for T8.
Thank you for all your help!
Kelly AnnaSeptember 13, 2015 at 2:18 pm
@kellann – if the currency issue is a problem with graphs then yes you may have to create separate ones occasionally but market share and GP ratios can be shown together. However you should find that with most ratios you can do your 3year analysis and comparisons without worrying about currency translationsSeptember 13, 2015 at 2:24 pm
Thanks again Trephena:) with the graphs , I also need to bring in 3 years of competitor?
Kelly AnnaSeptember 13, 2015 at 4:33 pm
@melanin – yes do three years of comparisonsSeptember 13, 2015 at 4:44 pm
Thank you very much for all the prompt responses?September 22, 2015 at 5:05 pm
Hi Trephena, I have some concern to ask about my comparator.
I choose a Snack and Confectionary business as main company to analysis. It is a dominant player in this segment. In later of 2014, it sold its core segment (snack+confectionary), restructured business to focus on Food and Flavor segment and has already launched first instant noodles products (it still operates in Food industry, just changes the field)
I choose one of the leaders in Food and Flavor segment for comparison. My main firm and this comparator both manufacture instant noodles and spices so I guess that I can use this point as common things for comparison. However this comparator also focuses on natural resources sector. Currently, it is developing the world-class polymetallic project.
I wonder whether i can use this firm for comparison or not since it has a non-overlapping business interest with my main firm. Both of them are group.
Thank you in advance 🙂September 23, 2015 at 9:23 am
I wanna add some further information of my case.
1) The comparator group has 2 subsidiaries. The subsidiary which major in Food &Flavor segment has its own financial statement and annual report.
So may I use this subsidiary as a comparator to my main firm for more relevance instead of using the whole group information? (include Food and Natural resources industry)
2) The subsidiary unfortunately only has Annual Report of 2014 in English, previous years’ AR + FS are in native language and also its official website. As I read @trephena comment before, it is acceptable to compare one year of main firm to comparator.
So I just wanna be sure that if I only use 2014 Annual Report together with some articles on internet, is it OK? May I be criticized as don’t gather sufficient information?
I hope to receive your reply soon as I only have this comparison part to complete my RAP. Thank you in advance 🙂September 23, 2015 at 10:10 am
Dear @liinda, I am about to go on vacation and so can only deal with basic questions that are straightforward or those that I can give a quick response to right now. Yours is more complex and would require the focus unfortunately I can’t give it at the moment. Sorry 🙁
However our colleagues @learningluminarium will be monitoring our Forums and dealing with queries during my absence so I am sure will assist you. 🙂
However I think only 1 years comparisons mean you would not be providing the level of detail required to get more than a C gradeSeptember 23, 2015 at 6:27 pm
September 25, 2015 at 9:12 am
1) If you are able to extract a specific segment as a comparator (food and flavours) and if the operations are similar to a large extent, that should be fine. You would however need to examine if there are shared costs (in your comparator) and how that has been allocated between segments. That may limit the effectiveness of your comparison. I would suggest you first try to obtain any industry ratios or averages before using a segment as a comparator. This is also due to response 2 below.
2) I agree with Trephena about the 1-year comparison. I highly discourage that, as that would mean that for 2 years, there is NO benchmark to determine if the target company has performed well. Therefore, in answering your topic, you have not assessed if the performance for 2012 and 2013 were good (because you do not have a benchmark for those years). I am inclined to agree that the maximum grade you’d get is a C, and it’s more than likely an examiner might fault you for your depth of analysis and fail you instead. Again, may I suggest you obtain some industry figures and averages if possible?
Hope this helps!September 25, 2015 at 9:31 am
Thank you for your help @learningluminarium 🙂
I have found another company in the same Food and Beverage industry with my main firm. It is a dairy business. Its operation is similar to my main firm. It gains 90% income from manufacturing dairy products while my main firm also earns 90% its income from manufacturing snack and confectionary products.
Since then, may I use this dairy firm for comparison with my main firm as it is more simple than using the firm mentioned in previous posts ?
May the non-ovelapping in main products is the concern?September 28, 2015 at 8:04 am
It’s generally a judgement call. I would say that a company that is 90% similar is usually a good fit, as it’s virtually impossible to get a 100% similar company.
Do remember to note the limitations in your project. Do you expect the 10% to impact your analysis much? If so, how?September 28, 2015 at 12:22 pm
@learningluminarium Thank you for your help. You clear my mind 🙂February 4, 2016 at 5:42 am
I attempted my degree under Topic 16 Risk management intially and did not receive a grade for my RAP
However, I have decided to resubmit my RAP.
I decided to to choose topic 8 and currenlty completed the initial chapters.
Inorder to continue with my Part 3 Analysis I am unable to find a competitor.
My organisation is in the mobiletelecommunication industry, it is a listed company hence financials of Sri Lanka are available publicly.Its head office being overseas, it has to publish the finanacials in srilanka since it listed in the stock xchange.
However, all other mobile service providers operating in srilanka are foreign entities which are all private companies registered in Sri Lanka, so only the consolidated financial statements are available fof their head office , for example ‘etisalat’ sevice provider head office is located at UAE so the financial statements are consolidated are published by head officce at UAE in there currency.I cannot obtain individual financials for Sri Lanka alone,besides dialog being a PLC and the rest being private companies, i doubt how i would proceed with it.
I am afraid that I cannot find a competitor in this case.And I am not that clear with, taking industry averages as i do not possess sample projects for this purpose.
Please be kind enough guide me in this regard.February 4, 2016 at 10:15 am
I can understand the predicament you are in. It is worth considering whether you can change the company you are studying. It is still not too late.
When you select a company, you should
1) look at how much information you can gather on it. Are there news reports, analyst reports, industry reports that cover it?
2) look at the financials. Do they follow IFRS and can u comprehend them?
3) last but definitely not least, are u able to find a comparator? The very essence of the word “comparator” means something that is similar. Students sometimes miss that point.
If you compare a Sri Lankan telco to a British telco, that would be difficult as the customer profile is different. Prices and margins would not be comparable.
A Sri Lankan telco would be better compared to a Pakistani or Indonesian telco. You may even find a better one.
All said, do weigh ploughing ahead with the current company or changing. All the best!
And yes, topic 17 is really easy as Trephena pointed out! Also worth thinking about 🙂
The Learning LuminariumFebruary 4, 2016 at 11:48 am
Does topic 17 require primary information, is it possible to continue with secondary info alone? eg; annual reportsFebruary 4, 2016 at 11:52 am
My organisation is a foreign entity mobile service provider who is registered in Sri Lanka as a public limited company and listed in stock exchange.
Therefore the organisation has acquired subsisdiaries in Sri Lanka and is audited by the external auditors of Sri Lanka.
Hence all the secondary information is available due its listed status.
Apart from what i mentinoed previously would the below work as i am feeling comfortable to work with local companies.
But, there is only one PLC in srilanka which is goverment owned whose financials are publicly available. It provides mobile services, fixed telecommunications and other services.
My orgainsation is privately owned company which is PLC listed in stock exchange, whereas the comparator is a PLC owned by the goverment.
My issue is whether the comparision is possible between PRIVATE and GOVERMENT owned companies as explained above.February 4, 2016 at 5:17 pm
@fathima – yes you can (and should) do T17 using secondary data only. Have a read through what is on the T17 forum topic. I have talked students through this topic who had minimal mentor help and they managed to pass. You might be able to use either the company that you were doing your T8 on or possibly the one you used for your first submission. You will need to read up though on Corporate Governance if you haven’t already passed P1 but it may tie in quite well with the some of the theoretical aspects you looked at for T16 as risk assessment is part of the remit for good CG.
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