Equity Research

Question 1

primarily means analyzing the company’s
financials, performing ratio analysis, forecasting the financials
and exploring scenarios to make a BUY/SELL stock investment
recommendation.

Answer 1

Equity Research

Question 2

To study companies, analyze financials, and look at
quantitative and qualitative aspects mainly for decision: whether
to invest or not

Answer 2

Purpose

Question 3

work for
both buy-side and sell-side firms in
the securities industry. They produce
research reports, projections, and
recommendations
concerning
companies and stocks.

Answer 3

Equity Research Analyst

Question 4

EQUITY RESEARCH PROCESS

Answer 4

01 Economic Analysis
02 Industry Analysis
03 Company Analysis
04 Financial Statement Analysis
05 Equity Research Report Writing
06 Presentation or Recommendation

Question 5

refers to evaluating costs and benefits to check the
viability of a project, investment opportunity, event, or any other matter. In
other words, it involves identifying, evaluating, and comparing costs and
benefits.

Answer 5

ECONOMIC ANALYSIS

Question 6

is a marketing process that provides statistics about
the market potential of your business products and services. This section
of your plan needs to have specific information about the current state of
the industry, and its target markets.

➢ Example: collecting data related to the economic situation of the country,
the demand for the product/service, statistics related to the income per
capita of citizens within the economy, inflation, employment rate, etc

Answer 6

INDUSTRY ANALYSIS

Question 7

Business Industry Sector

Answer 7

Financials
Mining and Oil
Media
Services
Logistics
Construction
Real Estate
Retail
Agriculture
Manufacturing

Question 8

(a.k.a.
fundamental analysis) examines
a firm’s
financial condition,
products
and
services,
and
competitive strategy. Typically,
this allows us to better identify
how an organization responds
to
external
threats
and
opportunities.

Answer 8

COMPANY ANALYSIS

Question 9

Use as a
basic tool in analyzing a firm.

Answer 9

SWOC and PESTLE

Question 10

involves gaining an understanding of an
organization’s financial situation by reviewing its financial reports. The
results can be used to make investment and lending decisions.

Answer 10

FINANCIAL STATEMENT ANALYSIS

Question 11

Financial Statement Analysis

Answer 11

Balance Sheet, Income Statement, and Cash Flow

Question 12

➢ Includes all the components of
an equity research
➢ Can be used in the CFA equity
research competition

Answer 12

REPORT WRITING

Question 13

Step 6 in Equity Research

Answer 13

Presentation and Recommendations

Question 14

MAJOR COMPONENTS OF AN ER

Answer 14

Executive Summary
Business Description
Industry Overview
Investment Summary
Financial Analysis
Financial Ration
Investment Risk
Environmental, Social, and Governance
Appendixes

Question 15

Reasons why we should invest in the chosen company [in terms of
financials, ESG, dividend earnings, etc

Answer 15

Executive Summary

Question 16

❑ Profile
❑ Sector
❑ Market scheme
❑ Acquisitions and partnerships of the company

Answer 16

Business Description

Question 17

Industry Overview

Answer 17

Industry overview and competitive advantage
❑ Brief description about the industry where the company belongs
❑ The company’s main contribution to the country [renewable energy, less
carbon footprint, etc]
❑ Competitive position against its competitors
❑ Opportunities driven from the company [sustainability contribution,
earnings obtained by stakeholders, pricing, value, etc]
❑ Current and future plans

Question 18

Investment Summary

Answer 18

❑ Revenue growth
❑ Volatility of stock price
❑ Rate of earnings given to investors
❑ Net income / losses through the years

Question 19

Financial Analysis

Answer 19

❑ Capital expenditures [provided with pie graph]
❑ Revenue growth [provided with pie or a bar graph]
❑ Net cash flow [shows the cash expenditures of the company]
❑ Net cash forecast [in the upcoming years, will their cash movement have
an upward or a downward trend?

Question 20

❑ Financial Ratios

Answer 20

❑ Gross profit margin
❑ ROE
❑ ROA…….. etc

Question 21

❑ Based on the group’s analysis/ assessment of the financial reports, what do you think are
the risks in investing on your chosen company

Answer 21

Investment Risk

Question 22

❑ Risks to be identified:

Answer 22

❑ Financial risk
❑ Political Risk
❑ Firm Risk [its potential in sustaining a marketable brand]
❑ Regulatory risk [government policies and laws which can possibly affect the
operations of the chosen company]
❑ Market

Question 23

Environment, Social, and Governance

Answer 23

❑ Environment [what are its contribution to the environment?]
❑ Social [impact to the society such as employment, engagement, public relations,
charities, etc]
❑ Governance [ what are the impact of the company to its stake holders? Does it payback
thru efficient and continuously increasing dividend payments? Does involve the
stakeholders in its company decisions?

Question 24

Last Major Component of ER

Answer 24

❑ Appendixes

Question 25

SKILLS REQUIRED FOR EQUITY RESEARCH

Answer 25

✓ Excellent financial analysis and equity research skills
✓ Global and business awareness / knowledge
✓ Presentation and writing capabilities
✓ Correct judgement
✓ Great assumption bias
✓ Teamwork

Question 26

Equity Research Benefits

Answer 26

✓ It gives us a glimpse of what’s
going on in the industry
✓ Provides
information
about
private companies
✓ Serves as a credible tool in
evaluating the “true” condition
of a company.

Question 27

T O P M A R K E T R E S E A R C H C O M P A N I E S I N P H
( a s o f J u n e 2 0 2 3 )

Answer 27

1. Stitch Marketing Research
2. Spectacle Strategy
3. BIXA Research
4. Prestige Market Research Services Co.
5. Kadence International - Philippines
6. Antedote Research Co.

Question 28

basic tool in analyzing a firm.

Answer 28

SWOT and PESTLE Analysis

Question 29

[government policies and laws which can possibly affect the
operations of the chosen company]

Answer 29

Regulatory risk

Question 30

Governance

Answer 30

[ what are the impact of the company to its stake holders? Does it payback
thru efficient and continuously increasing dividend payments? Does involve the
stakeholders in its company decisions?