Question 2 - You are considering investing in BHP Group Ltd (ASX: BHP). You will need...

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Question 2 - You are considering investing in BHP Group Ltd(ASX: BHP). You will need to make an investment recommendationbased on your market and theoretical value of BHP. This question isdesigned such that your answers in this question should build acompany and industry profile of BHP and help make your finalrecommendation. Any assumptions that you rely upon should beclearly stated in your answer.
i)Undertake an industry and company analysis for BHP (seesupplementary resources on Blackboard and textbook chapter listedin unit outline). This question asks you to consider the factorswhich influence BHP’s share price.
ii)What is the current price (any date from March 2019) ofordinary common shares of BHP Group Ltd (ASX: BHP)? Using anappropriate chart as reference, describe how this price has evolvedover the past 3-years, and compare the performance of BHP to anappropriate benchmark index.
iii)What has been the main driver(s) BHP’s share price movementover the past 3 years? What do you think will impact the shareprice in the future? .
iv)Using an appropriate technical analysis tool introduced inlecture 4, predict what the share price of BHP will be at the endof 31st September 2019. If your prediction using technical analysisis valid, what does this mean for the concept of marketefficiency?
v)What types of present valuation methods would be appropriateto value BHP given the information about the company? In yourchoice, provide a theoretical and applied rationale as to why youwould pick this model for BHP. Hint: consider the types ofvaluation models you can use given the information that isavailable.
vi)Valuation multiples are often used to compare companiesquickly. Identify at least two appropriate valuationmultiples/ratios and evaluate if the company is over or undervalued using relative valuation. What are the reasons you pickedthe multiples that you did and how did you conclude that BHP isover or under valued?
vii)What would your recommendation be with regards to buying orselling these shares right now? Justify your answer.

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Answer 1 The factors which influence the price of a share under industry analysis are laid down below a The demand and supply play a vital role to ensure a valid indication of prospects of the product relating to short term and medium term as an investor is able to evaluate the gap of supply and demand under the industry analysis as in such it is found that a particular industry may face under supply or over supply of production at different situation When the supply is excess it actually declines the price conversely when supply is not adequate the price is realised by levying higher price of the production This factor also relative to the perspective of BHP share price as in the mining industry often supply and demand gap occurs and accordingly an investor has to estimate such gap to choose the right time of investment b Another important factor under industry analysis is to find the condition of competitiveness among the companies which are considered as the force that enables to influence the price of the share in the market Competitive forces include barriers in taking entry in the market bargaining capacity of the supplier and rivalry Barriers in the new market is a constraint See Answer

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Question 2 - You are considering investing in BHP Group Ltd(ASX: BHP). You will need to make an investment recommendationbased on your market and theoretical value of BHP. This question isdesigned such that your answers in this question should build acompany and industry profile of BHP and help make your finalrecommendation. Any assumptions that you rely upon should beclearly stated in your answer.i)Undertake an industry and company analysis for BHP (seesupplementary resources on Blackboard and textbook chapter listedin unit outline). This question asks you to consider the factorswhich influence BHP’s share price.ii)What is the current price (any date from March 2019) ofordinary common shares of BHP Group Ltd (ASX: BHP)? Using anappropriate chart as reference, describe how this price has evolvedover the past 3-years, and compare the performance of BHP to anappropriate benchmark index.iii)What has been the main driver(s) BHP’s share price movementover the past 3 years? What do you think will impact the shareprice in the future? .iv)Using an appropriate technical analysis tool introduced inlecture 4, predict what the share price of BHP will be at the endof 31st September 2019. If your prediction using technical analysisis valid, what does this mean for the concept of marketefficiency?v)What types of present valuation methods would be appropriateto value BHP given the information about the company? In yourchoice, provide a theoretical and applied rationale as to why youwould pick this model for BHP. Hint: consider the types ofvaluation models you can use given the information that isavailable.vi)Valuation multiples are often used to compare companiesquickly. Identify at least two appropriate valuationmultiples/ratios and evaluate if the company is over or undervalued using relative valuation. What are the reasons you pickedthe multiples that you did and how did you conclude that BHP isover or under valued?vii)What would your recommendation be with regards to buying orselling these shares right now? Justify your answer.