FIN254 Project FAQs!

This post contains answers to some questions related to FIN254 Project that I have received recently from students. I will continuously update this post until the project due date. So, please check this from time to time to be updated, in case you may have a similar query. If you have an important question/issue that is not answered/discussed here, please let me know through email or blog comments.

Q: Sir where can I find Market Cap date and Current Price Earning Ratio (P/E) date?

Ans: There is no such fixed date. As these two measurements are calculated using market price, they change along with change in market price of shares. So, you should use the date when you accessed these data (or the company profile for that matter) on. To be technically correct you should use the "Last Update" date to be found in "Market Information" section of the company profile page at the top.

Q: In a news of my company, they did not mention net profit and EPS of previous period. What should I do? How do I do the comparison in the earnings table?

Ans: You will find that information in company profile under financial performance section.

Q: Dear sir, I have the following confusion regarding the unaudited half yearly report appeared as in the AB bank sample and in one of my stocks.

22-07-07
as per un-audited half yearly accounts on 30.06.07 the bank reported.....

And in the stock of QSMDRYCELL.the year is given as.

31-01-07
As per un-audited half yearly accounts on 31.12.06 the company reported.....

Sir, my question is can i put this record in the dividends earnings table, although there is difference in the years as shown in the sample?

Ans: Please try to understand there is nothing wrong in any of these two news. In your first news, it seems the company's year end is December, that's why it is disclosing half-yearly earnings up to June on 22nd July. On the other hand, the second company's year-end is probably June, that's why it is disclosing half-yearly earnings up to December on 31st January.

And yes, you should use this info in the half-yearly earnings table.

Q: What do we do if we see significant price change but without any disclosed news? 

Ans: You may explain the price change mentioning "for an unkown reason"...

Q: If we see a sponsor director selling significant amount of shares, should we consider that as price sensitive?

Ans: Yes.

Q: If a news has both regular and diluted earnings, which one should we use?

Ans: You should use the diluted one.

Q: What to do if I don't have news/data for 2007? How to fill up 2007 data?

Ans: If your stock does not have 2007 data/news, it means you stock was not listed by 2007. In that case, please leave them (for example, DnC2007 worksheet and Dividends-Earnings for 2007) blank and ignore that part.

Q: What should be the treatment for news of un-audited quarterly reports of net profit and eps declarations? Does that need to be recorded in the div. declarations tab?

Ans: Please ignore quarterly earnings for Dividends-Earnings worksheet.

Q: May I know what is meant by diluted EPS? Do we enter it as it is? I have entered the restated dividend instead of the previous one. Is that right?

Ans: Simply put, Diluted EPS is calculated after accounting for post-dividend (after all convertible securities have been exercised) number of outstanding shares. For example, for a company with Tk. 50 lac after tax net income and 1 lac shares, EPS would be 50/1 or Tk. 50 per share. If they declare 50% stock dividend, their number of shares would increase to 1.5 lac, so diluted/restated EPS would be 50/1.5 or Tk. 33.33. For more technically appropriate definition please visit http://www.investopedia.com/terms/d/dilutedeps.asp link.

When comparing current period's EPS with previous period's EPS, please use the diluted/restated EPS for the previous period. However, you don't need to change it in the previous period comparison.

For example, when you are comparing 2008 EPS with 2007 EPS, use the diluted/restated EPS for 2007. But don't use diluted/restated one for 2007 when comparing 2007 EPS with 2006 EPS.

Q: What should I do if there is no dividend announced?

Ans: Input '0' (zero) in the dividend cell and fill up other cells, for example, news date, record date, AGM date etc, as required.

Q: Sir, in my ORIONINFU project there is no EPS in audited or unaudited earnings, there is only net profit for every period. So, how I am going to find out the EPS?

Ans: You can get latest number of shares and other information of a company directly from the company profile in DSE website against number of securities. You may use the following link for Orion Infusion.

http://www.dse.com.bd/displayCompany.php?name=ORIONINFU

You may also view information of other listed companies by just replacing the stock ticker "ORIONINFU" by any other stock ticker after the equal sign (=) at the end of the above link.

Q: Sir, I didn’t understand this news “Khaleque Knitting & Garments Inds. (Pvt.) Ltd., one of the Corportate Sponsors of the company, has reported its intention to sell 15,00,000 shares out of its total holdings of 39,60,000 shares of the company at prevailing market price through Stock Exchange within next 30 working days.”

Ans: Apparently Khaleque Knitting is a name of a sponsor (corporate sponsor because it is a company, not a person) that contributed to the paid up capital of the company you are working on. Out of its total holdings (all the shares it owns) of 39.6 lac shares, it wants to sell 15 lac shares. As per regulation, before buying/selling shares a director/sponsor director must notify the regulator and the public of its intention.

Q: In the StockTradeInfo file, i don’t have the records at all for one of my shares. Apparently there are no records at all after "K". What should I do?

Ans: Please check the file carefully, it is probably not complete or you converted the file from xlsx (excel 2007) format to xls (excel 2003) format. Due to lower capacity of Excel 2003 it can not contain all the price info in a single file. That's why you must use Excel 2007.

Q: In some cases Un-Audited half yearly, there is only Net Income figures stated w/out the EPS values given at all. Even when I went to DSE company listings on the website, there is no figures or tables for such information. Should I completely skip the part for that given period?

Ans: If you don't have eps figures for a period you can use the other eps declarations (previous or next) and find number of shares and adjust that numbered with right or stock dividend declared in between and calculate the eps by dividing net profit by number of shares.

Q: Is it possible to "Import News" or obtain the relevant information regarding News Reader at all? If so how?

Ans: Yes, you may import latest news to the offline news reader. You need to create a “news.txt” (a text file) file within the same folder and paste all the news (you may get it from DSE official website’s news archive section) you want to incorporate and press the “import news” button.

Q: Is news such as "no price limit on the trading of the shares on __date" price sensitive news"?

Ans: No, this is not a price sensitive news by itself! Such a news always accompanies a price sensitive news, especially a news with recommended corporate benefits.

Q: As u have shown on Sample of ABBANK file, should we comment for a few news dates collectively or each news date will have separate comments?

Ans: It depends! If you think analyzing multiple news would make more sense then you may do so, otherwise interpret them separately.

Q: Can u plz re-clarify "Instant Real Effect" and "Long term Real Effect"? when will instant effect be positive?

Ans: Instant real effect would be positive if you see price increase on the news day or the next day (because sometimes companies disclose the news after the trading hour, in that case, reaction for the news would be seen on the next day’s trading). Long term would be when price gradually increases over a period of time (it may be a month or more, if there is no other price sensitive news in that period).

Q: The Board of Directors of ICB has recommended cash dividend @ 14% for the shareholders of ICB for the year 2006-2007. Date of AGM: 30.10.07, Time: 11:00 AM, Venue: BIAM Auditorium, 63 New Eskaton, Dhaka. Book closure: 16.10.07 to 30.10.07.

Sir should i consider the cash dividend of 14% a poor dividend and right negative in the cell of possible impact?

Ans: Please look at the dividend payment history and compare with them. With relatively very high premium, right share declaration may be a bad news.

Q: Sir, is this a price sensitive “As per latest share demat status intimated by the company, 51.65% shares of general public has been demated up to 04.06.09. Considering this, trading of the shares of the company will resume today.”

Ans: It depends on the situation... how long the share had been held up from trading... if it was for too long then short term effect may have negative impact on price as many would want to realize their money by selling their shares. Otherwise usually it is a good news that from now on shares of this company would be traded electronically, no longer paper-based, so many investors would be interested to invest... price may go up...

Q: Is the following news for right share declaration? If it is not then how will I understand which specific news is indicating the declaration of right shares?

“Following the change of the denomination of shares and market lot with effect from 25.07.07 (record date), the new face value of the share of the Bank will be Tk. 100.00 instead of Tk. 1000.00, market lot will be 50 shares instead of 5 shares and the new adjusted closing price of shares will be Tk. 382.50 per share.”

Ans: No, this is not a right share declaration. This is a share split news. The company has changed the denomination of it’s share’s face value from 1000 taka to 100 taka. After the mentioned record date, shareholders having 5 shares (with 1000 taka face value) would own 50 shares (with 100 taka face value). Usually share split news is considered a positive one.

For right share news, the company would specifically mention they are issuing right shares. For example, look at EBL news on “02/04/2008” (initial recommendation) “18/11/2008” (approval news from SEC) for a 50% right share declaration at par. For another example, look at BRACBANK news on “29/01/2008” where they recommended both stock and right (20% right with 400 taka premium) in a single news.

Q: What does demat mean? Is it a positive news or a negative news for a company that intends to go for demat? 

Ans: Dematerialisation (Demat for short) is a term used for converting physical (paper-based) share certificates to a de-materialised or electronic form share. 

It is indeed a positive news for a company. For a paper-based share, an investor has to go through the name transfer procedure (which is a lengthy and painstaking process) to be eligible for the corporate benefits (cash or stock dividend or right share etc.) announced by the company. For a demat share (electronic share) investors do not need to go through such a procedure.

Q: Sir when the book closure date is given like 16/10/2007 to 30/10/2007 then which one should we use.

Ans: Please consider the starting date to be the record date. The term “Book Closure” is used for paper based shares whereas “Record Date” is used for electronic shares. Paper shares take more time than electronic shares because they update the registered shareholders list manually. That’s why you see a duration is given for paper-based shares instead of just one record date for electronic shares. Only shareholders whose names appear on the register after the book closure/ Record Date are eligible to attend in the AGM/ EGM and also to receive dividends & bonus shares and entitlement to right shares, if any.

Q: As per un-audited half yearly accounts as on 30.06.08, the Company has reported profit after tax of Tk. 38.80 m with EPS of Tk. 9.70 as against last years half yearly of Tk. 31.01 m and Tk. 7.75 respectively.  

Sir, the above mentions about an un-audited half yearly profit. Do we treat it as positive news? Is the treatment same as that of an audited profit?

Ans: Yes, this should be treated as a positive news because their half-yearly earnings increased by 25%.

You may also compare double of this (the projected EPS = 9.70 * 2 = Tk. 19.40 per share) with the audited yearly EPS they disclosed for the previous period in your analysis.

Q: Though I have office 2007, I am not being able to open the Xl files.

Ans: I don't know why you are having problem with the project files. Make sure you have MS Excel 2007 installed in your computer. You may also try downloading the files again. If you still face the problem get the files from the resource drive.