INVESTMENT ANALYSIS

BBAP4103

Group: Nguyen van A

Class :

Lecturer:

HO CHI MINH CITY, October 29 2016.

 TABLE OF CONTENT

Page

I. Introduction of AMBANK Company 1

II. Computation of average returns, variance, standard
4
deviation and correlation of AMBANK Company
III. Introduction of DIGI Company 9
IV. Computation of average returns, variance, standard
11
deviation and correlation of DIGI Company
V. Comparison and evaluation of the riskiness for each
15
share.
VI. Conclusion 19
VII. References 20
I. Introduction of AMBANK Company

Established in August 1975, AmBank Group is one of the

largest banking groups in Malaysia. The Group comprises AMMB
Holdings Berhad, a public listed company on the Main Board of Bursa
Malaysia, with subsidiaries offering a wide range of conventional and
Islamic financial products and services. Through its universal banking
platform capabilities, the Group caters to the needs of a broad
spectrum of customer segments, for activities relating to personal
banking, business banking, investment banking, stockbroking, funds
management, life and general insurance, and family takaful.

While AmBank Group continues to grow dynamically and gain

recognition as Malaysias preferred financial solutions group, its
strategic partnerships with key global players has paved the way for
greater international connectivity. Complementing its strong
reputation as a key financial solution provider in Malaysia, its
partnerships with Australia and New Zealand Banking Group (ANZ),
Insurance Australia Group (IAG) and MetLife Inc has brought new
energy and value in how the Group conducts its business to better
serve its markets.

Today, AmBank Group employs a strong workforce of over 12,000

employees to serve the needs of more than six million individual and
corporate customers nationwide. The Group reaches out to its
customers by providing an extensive network of more than 175
AmBank branches and strategically located electronic banking
centres, and is already being recognised as the bank with the most
number of branches opened for weekend banking services, and with
the largest ATM network at 7-Eleven stores nationwide.

INVESTMENT ANALYSIS | BBAP4103 1

Our Vision

Through offering innovative financial products and excellent

customer service, coupled with sustainable business growth and
strategic business partnerships with global key players, AmBank
Group is well placed to achieve its Vision As Malaysias preferred
diversified, internationally connected financial solutions group, we
take pride in growing your future with us.

Financing

As your banking partner of choice, AmBank Group provides a

wide range of corporate financing and lending facilities, both
conventional and Shariah-compliant, to help you operate and grow
your business more efficiently.

With our solid understanding of your business needs and market

conditions, our teams of experts are empowered to recommend and
offer our corporate clients relevant financing facilities to help drive
business growth. Such as with the provision of corporate financing,
we undertake the functions of origination, structuring, advising and
execution of equity capital market activities ranging from initial public
offerings for Bursa Malaysia listing, to mergers and acquisitions,
among many others. By providing structured financing, we are ever
ready to provide customized multi-strategy capital raising solutions
and advisory services to both domestic and regional clients in varied
situations from distressed/stressed refinancing to capital restructuring
and others.

INVESTMENT ANALYSIS | BBAP4103 2

INVESTMENT ANALYSIS | BBAP4103 3
II. Computation of average returns, variance,
standard deviation and correlation
Average returns

Return on equity: Return on equity (ROE) is the amount of net

income returned as a percentage of shareholders equity. Return on
equity measures a corporation's profitability by revealing how much
profit a company generates with the money shareholders have
invested.

ROE is expressed as a percentage and calculated as:

Return on Equity = Net Income/Shareholder's Equity

Return on asset: The return on assets ratio, often called the return on
total assets, is a profitability ratio that measures the net income
produced by total assets during a period by comparing net income to
the average total assets. In other words, the return on assets ratio or
ROA measures how efficiently a company can manage its assets to
produce profits during a period.

Since company assets' sole purpose is to generate revenues and

produce profits, this ratio helps both management and investors see
how well the company can convert its investments in assets into
profits. You can look at ROA as a return on investment for the
company since capital assets are often the biggest investment for most
companies. In this case, the company invests money into capital assets
and the return is measured in profits.

Formula: Return on Assets = Net Income/Total Asset

Variance is a measurement of the spread between numbers in a data

set. The variance measures how far each number in the set is from the
mean. Variance is calculated by taking the differences between each
number in the set and the mean, squaring the differences (to make
them positive) and dividing the sum of the squares by the number of
values in the set.

Variance is calculated using historical data by following the steps

below.
INVESTMENT ANALYSIS | BBAP4103 4
Standard deviation: is a measure of the dispersion of a set of data from
its mean. If the data points are further from the mean, there is higher
deviation within the data set. Standard deviation is calculated as the

INVESTMENT ANALYSIS | BBAP4103 5

 square root of variance by determining the variation between each data
point relative to the mean.

Correlation, in the finance and investment industries, is a statistic that

measures the degree to which two securities move in relation to each
other. Correlations are used in advanced portfolio management.
Correlation is computed into what is known as the correlation coefficient,
which has value that must fall between -1 and 1.

The correlation coefficient measures the degree to which two variables

(such as two stock prices; indicated here by subscripts to rho, i and j)
move together. The correlation coefficient must always be between +1
and -1. (+1 indicates the extreme of perfect positive correlation, and -1
indicates the other extreme of perfect negative correlation.) Perfect
positive correlation indicates that whenever stock A goes up, stock B goes
up by the same percentage.

In 2012
Month Price Dividend Dividend yield Capital gain Total return
(RM) (RM) % % K
January 5.38 1.38 0.256 0.029 0.285
February 6.32 1.37 0.216 0.042 0.258
March 6.31 1.36 0.215 0.032 0.247
April 6.45 1.35 - -0.006 -0.006
May 6.71 1.39 0.207 0.046 0.252
June 6.56 1.36 0.062 0.050 0.112
July 5.47 0.92 0.207 0.123 0.330
August 6.67 0.98 - -0.033 -0.033
September 6.35 1.20 0.018 0.223 0.241
October 5.58 1.34 0.240 0.024 0.264
November 6.71 1.37 - -0.029 -0.029
December 6.43 1.38 0.215 0.031 0.246

Average return

=
0.285 + 0.258 + 0.247 -0.006 +0.252 + 0.112 +0.33 0.033 + 0.241 + 0.246- 0.029 + 0.246
INVESTMENT ANALYSIS | BBAP4103 6
12
= 0.181 or 18.1%

Return
(R) Deviation
2
Period ( R R )

R
(R )

1 0.285 0.104 0.011

2 0.258 0.077 0.006
3 0.247 0.066 0.004
4 -0.006 -0.187 0.035
5 0.252 0.071 0.005
6 0.112 -0.069 0.005
7 0.33 0.149 0.022
8 -0.033 -0.214 0.046
9 0.241 0.06 0.004
10 0.264 0.083 0.007
11 -0.029 -0.21 0.044
12 0.246 0.065 0.004
Total 2.167

Average
Variance

R 0.181 0.011

)
Standard
Deviation ( 0.104

In 2013
Dividend Capital Total
Price Dividend
Month yield gain return
(RM) (RM) % % K
January 6.26 1.41 0.225 0.043 0.268

INVESTMENT ANALYSIS | BBAP4103 7

 February 6.33 1.38 0.218 0.053 0.271
March 6.55 1.34 _ -0.047 -0.047
April 6.45 1.36 0.211 0.053 0.264
May 6.71 1.26 0.188 0.046 0.234
June 6.13 1.33 0.217 0.056 0.273
July 6,57 1.24 _ -0.123 -0.123
August 6.67 1.42 0.213 0.024 0.237
September 6.35 1.37 0.216 0.126 0.342
October 6.46 1.34 _ -0.075 -0.075
November 6.8 1.43 0.210 0.027 0.237
December 6.78 1.39 0.205 0.043 0.248

Average return

=
0.268 +0.271 -0.047 +0.264+0.234+0.273-0.123+0.237+0.342-0.075+0.237+0.248

=0.177 or 17.7%
12

Return
(R)
Deviation ( R 2
Period
R ( R R )
)

1 0.268 0.091 0.008

2 0.271 0.094 0.009
3 -0.047 -0.224 0.050
4 0.264 0.087 0.008
5 0.234 0.057 0.003
6 0.273 0.096 0.009
7 -0.123 -0.300 0.090
8 0.237 0.060 0.004
9 0.342 0.165 0.027
10 -0.075 -0.252 0.064
11 0.237 0.060 0.004
12 0.248 0.071 0.005

INVESTMENT ANALYSIS | BBAP4103 8

Total 2.129

Average

R 0.177 Variance ) 0.008

Standard
0.091
Deviation (

III. Introduction of DIGI Company

DiGi.Com Berhad is listed on Bursa Malaysia and is part of the
Telenor Group, a global telecommunications provider. DiGi provides mobile
voice, Internet and digital services to 11 million customers in Malaysia.
Through its mission of 'Internet for All', DiGi is committed to driving
Malaysia's growth by building a mobile Internet environment that enables
true connectivity, creating socio-economic development and aiding
businesses to prosper. DiGi continues to be a game-changer in the Malaysian
telecommunications industry with a solid history of innovative products and
services while being a leader in progressive and responsible business
practices.

Connecting More People to the Internet

Malaysia is progressively going mobile and we aim to put the Internet

in the hands of all Malaysians empowering them to change the way they
work, learn, play and live. To achieve this, we plan to offer the right
combination of devices, digital services and applications, affordable pricing
and ensuring the best mobile Internet experience our 'Internet for All'
promise.

Making 'Internet for All' a Reality

We are connecting customers to new data applications and services every

day inspiring positive and meaningful adoption of mobile Internet through
various empowerment initiatives.

Putting the Future in your Hands

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The rising adoption of mobile Internet services is the biggest driving force
for the Malaysian telecommunication industry accelerated by the increase
in smart device usage, stronger networks and faster connection speeds.

We aim to deliver the best experience to help our customers across Malaysia
to harness the capabilities of mobile Internet anytime, anywhere and on any
device.

Our Vision, Mission and Values

Our vision is to be a company that is always 'Changing the Game'. We do

this by constantly pushing boundaries, defining new standards, and ensuring
continuous improvements in all parts of our business.

We deliver Internet for all as part of our commitment to building a connected

Malaysia - enabling access to Mobile Internet services and applications by
offering customers the right combination of devices and value pricing, as
well as the best usage experience.

Keep Promises

- We take ownership for delivering on our goals and responsibilities, and

pride ourselves on driving quality into everything we do.

Make It Easy

- We aim for simplicity in the way we work, and in offering products and
services that are easy to understand and easy to use.

Be Respectful

- We are open-minded and professional in our conduct, and appreciate

differences in cultures, opinions, and outlook.

Be Inspiring

- We bring passion, energy, and creativity into everything we do, and make
every effort to constantly drive change and continuous improvement.

Code of conduct

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 Digi is committed to conducting its business in accordance with the highest
ethical standards and maintaining a workplace environment that encourages
open and honest communication.

As part of this commitment, Digi has adopted the Digi Code of Conduct
which defines the core principles and ethical standards that form the basis on
how Digi creates its value. The Code applies to members of the Board of
Directors, managers, and other employees as well as those acting on behalf
of Digi.

Digi will never compromise on its integrity and shall take all action it
considers appropriate to investigate any misconducts reported due to
violations of this Code.

IV. Computation of average returns, variance,

standard deviation and correlation
2012

Dividend Capital Total

Price Dividend
Month yield gain return
(RM) (RM) % % K
January 4.45 1.05 0.236 0.025 0.261
February 4.36 1.03 0.236 0.065 0.301
March 4.65 1.12 0.241 0.098 0.339
April 4.76 1.09 _ -0.007 -0.007
May 4.58 1.03 _ -0.145 -0.145
June 4.77 1.04 0.218 0.006 0.224
July 4.35 1.05 0.241 0.035 0.276
August 4.66 1.02 0.219 0.124 0.343
September 4.34 1.12 0.258 0.047 0.305
October 4.88 1.13 0.232 0.036 0.268
November 4.76 1.09 0.229 0.095 0.324
December 4.45 1.08 _ 0.039 -0.039

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Average return
0.261+0.301+0.339-0.007-0.145+0.224+0.276+0.343+0.305+0.268+0.324-0.039
=

12

=0.204 or 20.4%

Return Deviation
Period (R) ( R R )
(R R )

1 0.261 0.057 0.003

2 0.301 0.097 0.009
3 0.339 0.135 0.018
4 -0.007 -0.211 0.045
5 -0.145 -0.349 0.122
6 0.224 0.020 0.000
7 0.276 0.072 0.005
8 0.343 0.139 0.019
9 0.305 0.101 0.010
10 0.268 0.064 0.004
11 0.324 0.120 0.014
12 -0.039 -0.243 0.059
Total 2.450

Variance

Average 0.204 0.003

R )

Standard
Deviation( 0.057

2013

Month Price Dividend Dividend Capital Total

yield gain return

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INVESTMENT ANALYSIS | BBAP4103
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 (RM) (RM) % % K
January 5.02 1.42 0.283 0.009 0.292
February 4.88 1.41 0.289 0.076 0.365
March 4.98 1.43 0.287 0.243 0.530
April 5.12 1.39 _ -0.123 -0.123
May 5.16 1.35 0.262 0.087 0.349
June 4.77 1.38 _ -0.009 -0.009
July 4.95 1.4 0.283 0.245 0.528
August 5.01 1.45 0.289 0.046 0.335
September 5.03 1.42 0.282 0.124 0.406
October 4.99 1.43 0.287 0.035 0.322
November 5.02 1.44 _ -0.036 -0.036
December 4.96 1.38 _ -0.057 -0.057

Average return
2.292+0.365+0.53-0.123+0.349-0.009+0.528+0.335+0.406+0.322-0.036-0.057
=

12

=0.241 or 24.1%

2
Return ( R R )
Deviation ( R
Period (R)
R )

1 0.292 0.051 0.003

2 0.365 0.124 0.015
3 0.530 0.289 0.084
4 -0.123 -0.364 0.132
5 0.349 0.108 0.012
6 -0.009 -0.250 0.063
7 0.528 0.287 0.082
8 0.335 0.094 0.009
9 0.406 0.165 0.027
10 0.322 0.081 0.006

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 11 -0.036 -0.277 0.077
12 -0.057 -0.298 0.089
Total 2.902

Variance

Average 0.241 0.003

R )

Standard
Deviation( 0.051

V. Comparison and evaluation of the

riskiness for each share

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Risk is an inherent part of investing. In order to get a reasonable return on an
investment, risk has to be present. A riskless asset will produce little or no
return. The intelligent investor manages risk by recognizing its existence,
measuring its degree in any given investment and realistically assessing his
or her capacity to take risk. A prudent investor will seek to match and/or
offset risk by assembling a reasonable number of mutual funds with
favorable risk-return profiles in a diversity of fund categories. This is done
by first identifying a mix of mutual funds according to company size
(market-cap), investing style (value, growth, and blend) and asset allocation
(stock and bond).

The risk of capital loss: a capital loss is the loss incurred when a capital
asset, such as an investment or real estate, decreases in value; this loss is not
realized until the asset is sold for a price that is lower than the original
purchase price. A capital loss is essentially the difference between the
purchase price and the price at which the asset is sold, where the sale price is
lower than the purchase price. For example, if an investor bought a house for
$250,000 and sold the house five years later for $200,000, the investor
realizes a capital loss of $50,000.

Volatility risk: the risk that the holder of an option is exposed to based on
the potential for the volatility of the underlying security or the market's
perception of that volatility to change. It is a rate at which the price of a
security increases or decreases for a given set of returns. Volatility is
measured by calculating the standard deviation of the annualized returns
over a given period of time. It shows the range to which the price of a
security may increase or decrease.

Timing risk: timing risk is a type of risk most often seen in growth asset
classes such as shares or property. Values in these asset classes can be
volatile, and this volatility means that there is a chance that prices will fall
between two time periods.

For example, shares in a company might fall in market value from $10 at
time A, to $5 at time B. An investor who bought at time A and then needed to
sell at time B will lose 50% of their investment. If the investor does not sell
at point B, and prices then rise again to $15 at point C, then the investor has
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made 50% on their investment. However, the investor has still missed out
by virtue of the fact that he or she would have made a higher profit had they
invested at point B. In this way, it can be seen that the point of time at which
a share is bought has a substantial impact on the value of that share.
Understanding business cycles and how different companies perform may be
truly useful to handle the sequence of timing risk.

The risk of poor quality advice: are the investment recommendations made
to they supported by a thoroughly argued case, or are they merely hearsay?
The more reliable information they have, the better the decisions will be.
Adopting a disciplined decision-making process will help them to minimize
losses while they patiently build a portfolio. Recommendations involving
high rates of investment return can fail to produce satisfactory results when
taxation, ongoing fees and constant changes in investment cycles affect the
performance.

Legislative risk: The investment strategies or even individual investments

could be affected by changes to the current laws.

Currency risk: Currency risks are risks that arise from changes in the
relative valuation of currencies. These changes can create unpredictable
gains and losses when the profits or dividends from an investment are
converted from a foreign currency into U.S. dollars. Investors can reduce
currency risk by using hedges and other techniques designed to offset any
currency-related gains or losses.

Strategic Risk: strategic risk is the risk of not achieving the Groups
corporate strategic goals. The Groups overall strategic planning reflects the
Groups vision and mission, taking into consideration the Groups internal
capabilities and external factors. The Board is actively involved in setting of
strategic goals, and is regularly updated on matters affecting corporate
strategy implementation and corporate projects/initiatives.

Reputational Risk: The Group recognizes that maintaining its reputation

among clients, investors, regulators and the general public is an important
aspect of minimizing legal and operational risk. Maintaining our reputation
depends on a large number of factors, including the selection of our clients

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 and business partners and the conduct of our business activities. The Group
seeks to maintain its reputation by screening potential clients and business
partners and by conducting our business activities in accordance with high
ethical standards and regulatory requirements.

Material Risks

The Group must have clearly articulated definitions of each material

risk type to be included in the ICAAP; and

Processes to identify and determine the materiality of current risk

types, change to existing risk types and new risk types must be established.

Classification of Risk: Following are the two broad type risks

Systematic risk: The risk inherent to the entire market or entire market segment
Also known as "un- diversifiable risk" or "market risk." Systematic risk is also
referred as uncontrollable risk. Systematic is non diversifiable and is associated
with the securities market as well as economic, sociological, political and legal
considerations of the prices of all securities

Unsystematic Risk: unsystematic risk affects a very specific group of securities

or an individual security

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Market risk: Market risk as that portion of total variability of return caused by
the alternating forces of bull and bear markets. When the security index moves
upward haltingly for a significant period of time, it is known as bull market, the
index moves from a down level to the peak. Bear market is just is a reverse to
the bull market, the index decline haltingly from the peak to a market low point
called through for a significant period of time. During the bull and bear market
more than 80% of the security prices rise or fall along with the stock market
indices

Interest rate risk: Interest rate risk is the variation in the single period rates of
return caused by the fluctuation in the market interest rate. Most commonly
interest rate risk affects the price of bounds, debentures and stocks. The
fluctuations in the interest rates are caused by the changes in the government
monetary policy and the changes that occur in the interest rates of treasury bills
and the government bonds. The bonds issued by the government and quasi
government are considered to be risk free. If higher interest rates are offered,
investors would like to switch his investments from private sector bounds to
public sector bounds.

Internal business risk: Internal business risk associated with the operational
efficiency of the firm. The operational efficiency differs from company to
company.

External business risk: External risk is the result of operating conditions

imposed in the firm by circumstances beyond its control. The external
environments in which it operates exert some pressure on the firm

VI. Conclusion
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In conclusion, this assignment contains five sections. Firstly, it is
introduction of the company including AMBANK and HIGI company. This
section gives out general information about the companys business
activities, vision as well as the companys business development. Following
that is the computation of average returns, variance, standard deviation and
correlation between the returns for the shares of AMBANK. Next, it's the
computation of average returns, variance, standard deviation and correlation
between the returns for the shares of the HIGI. This is followed by
comparison and evaluation of the riskiness for each share. At the end is
summary section.

References

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https://en.wikipedia.org/wiki/AmBank

https://en.wikipedia.org/wiki/Digi_Telecommunications

http://www.investopedia.com/terms/c/capital-investment-analysis.asp

http://www.investopedia.com/terms/i/investment-analysis.asp

https://strategiccfo.com/investment-analysis/

http://www.investopedia.com/walkthrough/corporate-finance/4/return-
risk/expected-return.aspx

http://www.investopedia.com/exam-guide/cfa-level-1/portfolio-
management/portfolio-calculations.asp

http://www.investopedia.com/articles/financial-theory/11/calculating-
covariance.asp

http://thismatter.com/money/investments/portfolios.htm

http://www.aaii.com/computerizedinvesting/article/mean-variance-
optimization-multi-asset-portfolio

http://mathworld.wolfram.com/Covariance.html

http://www.investopedia.com/ask/answers/050615/what-metrics-should-i-
use-evaluate-risk-return-tradeoff-mutual-fund.asp

http://www.investopedia.com/articles/08/performance-measure.asp

http://www.asx.com.au/data/accessibility/course_03_etext.htm

http://www.davyselect.ie/investment-choices/risks/risks-of-investing-in-
shares.html

http://www.investopedia.com/terms/s/speculativestock.asp

http://www.getsmarteraboutmoney.ca/en/managing-your-
money/investing/stocks/Pages/Risks-of-stocks.aspx#.WBN4e3dh3LY

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