To demonstrate what you have learnt from the sessions during module 1 we would like you to prepare a report which summarises your answers to the following questions based on SABIC. Your report should be between 2500 and 3500 words long. You can include diagrams and figures in your answer to help to clarify and add flavour to the points that you are making. These will not be included in the word count.
To demonstrate what you have learnt from the sessions during module 1 we would like you to prepare a report which summarises your answers to the following questions based on SABIC. Your report should be between 2500 and 3500 words long. You can include diagrams and figures in your answer to help to clarify and add flavour to the points that you are making. These will not be included in the word count.
Save your report in word or PDF format and submit it as well as the spreadsheet provided using the “submit assignment” button above. When preparing the documents please remember to do the following:
- Make sure to clearly number your answers
- Include your Full Name in the document header and on the spreadsheet
Materials
- SABIC Consolidated Financial Statements 2021
- SABIC Consolidated Financial Statements 2020
- SABIC Consolidated Financial Statements 2019
- SABIC Spreadsheet Valuation
1. Briefly describe SABIC, and what it does. (guide 200 words)
2. Related to SABIC’s current business model and strategy (think Who/What/How). (guide excluding figures and diagrams 1000 words total)
a. What is Sabic’s business model? What tradeoffs has it made in choosing its business model?
b. What are the potential sources of disruption that SABIC may face in the near term (i.e., five years)?
3. What are ways in which SABIC can become more sustainable and ensure that it focuses more on long-term value creation to society rather than short-term profit? (guide 300 words)
4. Measure SABIC’s financial performance over the last 3 years (guide excluding tables and figures 800 words total), in terms of:
a.Growth, Return on equity, Return on average capital employed (ROACE) and its drivers ( margin and asset turn), Gearing and financial structure
b. What insights do the company give about the organisation’s performance at the segment level?
c. Choose two appropriate comparator firms and show how SABIC’s financial performance compares.
5. Do the results of your financial analysis in part 3 support your strategic analysis in part 2? (guide 200 words) In other words, does SABIC have sustainable competitive advantage that creates value for its investors?
6. Using the valuation tools discussed in class, the spreadsheets provided and publicly available financial data value SABIC. (guide excluding tables, figures and spreadsheets 500 words total)
a. Discuss whether you feel that SABIC was fairly valued at the time of ARAMCO’s announcement of the deal to acquire SABIC. NB the spreadsheet titled SOLUTION has been updated with 2019, 2020 and 2021 numbers (highlighted in red).
b. How might the value of SABIC change if synergies with Aramco were taken into account? For this answer we are looking for your qualitative ideas rather than a new valuation.