Recent Common Equity Issue

Name of Company

Offer Price

Bid Price

Madison Gas & Electric Co.

$16.38

$16.13

Tetra Tec, Inc.

$8.00

$8.25

Middle South Utilities Inc

$16.75

$16.75

Wacoal Corp

$22.63

$22.38

Loua Public Service Co.

$21.50

$21.38

Surgicot Inc.

$7.13

$6.75

Free Mont General Corp.

$14.50

$14.13

Intermountain Gas Co.

$16.75

$17.50

Omega Optical Co.

$10.00

8.7500

Grow Chemical Corp.

$10.25

$10.38

Brougham Industries Inc.

$7.50

$7.75

Makita Electric Works Ltd.

$33.88

$33.63

Contineous Curve Inc.

$10.00

$10.75

Kennametal Inc.

$25.25

$24.63

NY State Electric & Gas Corp.

$29.50

$29.13

St. Jude Medical Inc.

$3.50

$6.50

Average Market offerings

$15.84

$15.92

 

Here Average Market Offer Price is $15.84 and Bid Price $15.92.

 

Approaches

Hope-In Food Share Price

Price Earning Multiplier Approach

$20.38

Price to Book Value Ratio Approach

$12.44

Dividend Discount Model

Under Constant Growth Model

$14.86

Average market price

                                 Offer Price

                                 Bid Price

$15.84

$15.92

Price Range

$12.44 to $20.38

Our Recommendation

$15.50

 

Recommendation

 

So, considering all the techniques of stock valuation the offer price of Hope-In Food Store, Incorporated should be $15.40.

 

Justification

 

Particular

Before Position

After Restructuring

WACC

18.19%

18.39%

Value of the firm

$2,878,438

$2,931,569

 

Comments to IPO

 

Minimum acceptable share price by investment banker was $10.6 per share and Hop In Food determined that the share price would be $150.50.

 

So, Investment bank Scott and String fellow will be benefited by underwriting Hope-In Food shares. On the other side, expecting market price growth is 10% to 20%.

 

So, this is high time for share issue in the market and investment bank will be gainer by underwriting the company’s share because the company’s growth position and financing position is better.

 

 

 

Thank you