-
2.1 Project Plan: a project plan and
schedule for writing report
2.1.1 Objectives for gathering
information
The Economic crisis of 2008
leads an economic recession throughout the whole
world,
especially
several
important
indicators
of
economic
become
downturn.
This
crisis
rapidly
evolved
into
a
global
credit
crisis,
deflation
and
sharp
declines
in
various
stock
indexes,
and
large
reductions
in
the
market
value
of
stock.
Many
experts
predicated
that
the
Britain
consumer
spending
would
slow
to
only
0.2
percent,
and
investment
will
also
drop
in
recent
two-
year.
Under
these
worse
surroundings,
investing becomes more risk. Therefore,
I must use the ?
100, 000 to invest
suitable
shares at the appropriate time
with appropriate price.
Firstly, I should collect enough
information to help me confirm four shares
portfolio.
In this part, I must clear
the background information to each company,
understand the
strategic
management
of
them
and
analyze
their
financial
reports.
Then,
I
will
use
some
fundamental
analysis
methods
to
help
me
calculate
some
ratios
to
make
sure
their share price have
the large space to increase.
Secondly,
I
should
compare
the
same
sector
companies
and
clearly
know
the
performance
and
fluctuation
about
each
share.
In
addition,
I
will
record
the
macro
economic
information
to
know
the
UK
and
international
market
performance
in
general.
In
order
to
know
the
macro
economic,
I
must
find
the
inflation
rate,
unemployment rate, and exchange rate
recording over the 3 years. At the same time, I
should
also
pay
attention
to
some
latest
new,
including
the
positive
and
negative.
Because of them
can affect the shares fluctuation.
2.1.2 Project
plan for developing
In
order
to
submit
a
perfect
report,
plentiful
and
appropriate
information
should
be
collected in this part. I will spend 3
weeks to finish this part, which is from
16
th
.Feb to
7
th
.Mar. In this
implementation part, it can be included the
following stages:
Stage 1: I will
record the shares portfolio detail information. It
requires me to collect
the open and
close prices for each share at first. Then, I
should record the sector index,
FTSE
100, All Share Indices and other information
weekly from the website. Through
this,
I
can
clearly
know
the
performance
and
fluctuation
for
the
four
shares.
And
understand the UK stock
market in general at the same time.
Stage 2: Then I will collect relevant
materials about the company, macro economic
performance
and
industries
information.
As
well
as,
I
should
pay
attention
to
some
latest
news,
which
involved
positive
and
negative
factors
that
can
affect
the
shares
prices.
Stage 3: I will categorize the
collected information and put them in order. It
will help
me to find appropriate
information quickly.
Stage
4: After having categorized information, it is
time for me to analyze information
and
then write the report for developing. It is
significant for the whole plan.
Stage
5:
The
useful
information
should
be
annexed
and
labeled
in
the
end
of
the
developing.
Stage 6: I will check the developing
part and then hand in them at last.
2.1.3 Schedule for developing report
The whole developing report will
requires me cost three weeks. The
1
st
week, I will
collect the information. The
2
nd
week, I am going to
analyze the collected information.
The
last week, I will write the developing part. The
following table shows the detail
arrangement for the developing part.
Table-1 Developing part
schedule
Week
Time
2 days
2
days
1
st
week
3
days
2
nd
week
2 days
23
rd.
Feb
-24
th
Feb.2009
2
days
3 days
1day
3
th
week
3 days
25
th
.Feb-26
th.
Feb.2009
27
t
h
.Feb-28
th.
Feb
2009
1
st
.Mar.2009
Date
16
th
< br>Feb.-17
th.
Feb.2009
18
th
.Feb-19
t
h
Feb.2009
20
th
.Feb-22
nd
.Feb.2009
Task
Collect
company
information
for
each share
Investigate
sectors
or
industries
information for each share
Collect
the
macro
economic
information for UK
Analyze
the
relevant
company
information
about
affecting
the
shares fluctuation
Analyze
collated
information
for
sector and industries
Trough
collected
information
know
the
UK
stock
market
in
general
Summing-up information
Write
first draft.
The first day
write the project plan
2
nd
.Mar
–
4
th
.Mar.2009
The
following
day
write
the
objective
The last day write
the schedule
5
th
.Mar.2009
6
th
.Mar.2009
7
th
.Mar.2009
Write second draft
Take
all
information
annexed
and
labelled
Amend
and
check
the
developing
part
1 day
1 day
1 day
Note:
Recording the relevant price, sector index for
four shares and FSTE 100, all
share
index will be collected every week
2.2 Issues being considered
for research
There are many factors can
influence the shares performance. Consider those
factors
become very important. The
below investigate and analyze will help me know
each
share clearly.
2.2.1 Simple introduction
of the companies selected
LAND
Securities Real Estate Investment Trust (LAND.L)
Land Securities has a huge amount of
real estate all over the UK. It is indeed one of
the biggest owners in cities,
especially city centers. Land Securities is a
leading Real
Estate Investment Trust.
His national portfolio of commercial property
includes some
of the UK’s
best
-known shopping centers
and landmark buildings in
London. They
are
at
the
forefront
of
urban
renaissance
through
England
multi-billion
pound
development
program,
transforming
regional
city
centers
and
key
sites
in
Central
London.
British
American Tobacco (BATS.L)
British
American Tobacco undertakes some 800,000 cross-
border transactions a year
–
involving raw materials, equipment and
finished products. Thereby, BATS.L is one of
the biggest companies in tobacco
industry. It has had very good performance in
2008,
with increased profit and share
growth in many markets. British American Tobacco
is
always committed to maintaining high
standards of corporate with governance. It also
has 42 % of Reynolds American Inc,
which owns the Kools and GPC brands, and the
Canadian
leader
in
the
sector,
Imperial
Tobacco.
With
thousand
of
employees,
BATS.L
is
an
empire.
On
top
of
its
vast
distribution
network,
it
manages
tobacco
plantations, notably
in Poland and in several African countries.
Shire Pharmaceutical Group
Plc (SHP.L)
Shire is the leading
specialty biopharmaceutical company that focuses
on meeting the
needs
of
the
specialist
physician.
Shire
focuses
its
business
on
attention deficit
and
hyperactivity
disorder,
human
genetic
therapies
and
gastrointestinal
diseases.
Shire
already has a wide
range of products on the market and continues to
use its search and
development
expertise
to
ensure
that
it
can
make
more
products
available
for
these
medically challenging diseases in the
future. As a company, Shire has obtained many
significant
breakthroughs
on
HIV
and
AIDS
therapies.
This
enables
them
to
gain
considerable expertise in these areas
and build long term relationships with specialist
prescribers.
Liberty
International Real Estate Investment Trust (LII.L)
Liberty
International
is
a
highly
specialized
business
focused
on
quality
retail
property, with a very strong market
position in UK regional shopping centers, which
constitute
78
per
cent
of
their
overall
investment
properties,
with
retail
overall
comprising
93
per
cent:
They
have
interests
in
four
of
the
UK’s
eight
out
-of-town
super-regional centers with a combined
value of
￡
3.1 billion while
in-town centers
in
prime
city
locations
amount
to
￡
3.2
billion.
They
also
have
an
enviable
geographic spread across the UK
including major cities such as Manchester,
Glasgow,
Newcastle, Nottingham and
Cardiff as well as a strong presence in the South
East of
England
through
four
of
our
major
shopping
centers,
with
an
aggregate
value
of
￡
2.4 billion,
including our flagship Lakeside, Thurrock.
2.2.2 Main issues
considered for research
In order to
know the each share fluctuation clearly, I must
investigate and analyze the
background
information,
which
include
the
economic
environment,
industry
environment,
company condition, stock price as well as other
relevant information.
(1) Economic environment
The
macro
economic
environment
may
be
mainly
influence
the
defined
company.
Accordingly, it is important for me to
investigate the external environment.
Unemployment
Table-2 UK unemployment
Year
Jan
2008
2007
2006
Feb
Mar
Apr
May
Jun
Jul
2.50
2.60
2.80
2.70
2.90
2.90
Aug
Sep
Oct
Nov
Dec
2.50
2.50
2.50
2.90
2.90
2.80
2.80
2.90
2.90
2.60
2.70
2.80
2.90
3.10
3.30
3.60
2.70
2.60
2.60
2.60
2.60
2.50
2.50
3.00
3.00
3.00
3.00
3.00
2.90
2.90
U.K. unemployment rose at
the second- fastest pace since 1991. In 2008
December,
the
worsening
recession
lead
thousand
companies
to
cut
jobs.
Office
for
National
Statistics
has
revealed
that
the
number
of
people
out
of
work
in
the
UK
rose
by
77,900 to 1.16 million, which
represented the highest level in over a decade.
Till now,
the
pace
of
job
cuts
across
almost
all
areas
of
the
economy
has
risen
even
more
sharply
in the opening months of 2009 with employers in
the retail, manufacturing,
construction
and
financial
services
sectors.
The
unemployment
rate
of
6.3
per
cent,
although still lagging behind most of
the UK’s main continental European rivals, was
the highest level since 1999. UK
economic experts emphasize solving unemployment
is become more and more important in
the following year.
Balance of Trade
Graph-1 UK
balance of trade
(Source:/Economics/?Sy
mbol=balance of trade)
United
Kingdom
is
the
world's
fifth-largest
trading
nation,
highly
dependent
on
foreign trade. Recently, the UK trade
deficit rose in November as exports of goods fell
sharply,
in
a
sign
of
the
threat
posed
by
collapsing
global
demand
to
the
British
economy.
Both
imports
and
exports
fell
as
domestic
and
international
demand
weakened
amid
a
global
recession
that
is
hitting
most
of
Britain’s
main
trading
partners. The goods trade deficit hit
￡
8.3bn up from a downwardly
revised
￡
7.6bn
in
October, the highest
level
since records
began in
1697.
In November
2008, total
exports of goods
fell by 5.8 per cent, amid a sharp drop in exports
to countries outside
the EU, while
total imports fell by 1.8 per cent.
Interest rate
Graph-2 UK
interest rate
(Source:/Economics/?Sy
mbol=interest rate)
Interest rates
have fallen significantly in 2008. Due to the
global economic crisis of
2008,
worldwide
central
banks
coordinate
cut
in
interest
rate
to
stimulate
the
economic. On 4 December
2008, the Bank of England cut interest rates from
3% to
2%, which amounts to the lowest
level since 1951. Recent falls in sterling may
help
exporters
to
limit
the
impact
of
the
global
slowdown.
Some
market
participants
believe that economic conditions
are now so strained that an even larger
cut
would
have
been
warranted.
As
the
Monetary
Policy
Committee,
they
want
try
to
avoid
inflation slipping below their
inflation target of 1-3%. Base interest rates
could fall to
1.5%
in
2009.
Monetary
Policy
Committee
may
slash
interest
rate
to
stimulate
household spending
& investment into the economy to balance the
economic. Many
experts believe that
2009 is likely to see even lower rates.
GDP
Graph-3 UK GDP growth rate
(
Source:/Economics/?Sy
mbol=GDP)
Britain
fell
deeper
into
recession
during
the
final
three
months
of
2008
as
the
economy
contracted by 1.5 per cent. The rapid decline in
UK, economic growth in the
fourth
quarter of 2008 was the worst performance since
the second quarter of 1980.
Economists
on average expect UK is in the middle of steep
downturn, and confirmed
the economy
grew at its slowest annual pace for sixteen years.
Output is unlikely to
climb back to
last year’s levels until late 2011 or
2012
(2)
Industrial environment
Understand the
each company industrial environment that can help
me recognize the
four
companies
in
general.
Thereby,
industrial
environment
is
also
essential
to
be
considered.
Real Estate
Investment Trust (R.E.I.T) diversified Industry
In
my
share
portfolio,
both
LAND.L
and
LII.L
lies
in
the
same
industry-
R.E.I.T
diversified. In
UK, there are 52 companies in R.E.I.T diversified
Industry. The Plum
Creek
Timber
Co.
Inc,
Rayonier
Inc
and
National
Retail
Properties,
Inc
are
three
biggest
companies in this sector around UK. Real estate
development in the UK has
changed
in
recent
years.
As
a
whole,
the
house
price
continues
to
fall
since
the
economic crisis of 2008. However, some
retail real estate investment trust claim they
keep healthy revenue gross in despite
of the weak economy. For example, National
Retail Properties Inc. said its fourth-
quarter results grew 18 percent as turnover. On
the other hand, the timberland price
keeps a slower pace of growth, but it is growth
nonetheless.
The
value
of
timberland
rose
5%
in
UK
market.
In
2007,
timber
appreciation was a
towering 15%.
For Land
securities and Liberty International, they are
belongs to rapidly accelerating
industry
growth
in
industry
life
cycle.
Compared
with
others
,
the
share’s
price
of
Liberty
International
and
Land
securities
are
at
relatively
high
level.
Both
of
them
have
stable
capital
structure
and
begin
to
extension
its
business.
Their
productions
begin from
single, costliness to diverse and low price
separately. Land securities is the
maker leader in large scale shopping
center and the owner of other prime retail assets.
However, Liberty International was
built up in 1987 and was listing in London Stock
Exchange in 1992. His gross retail
income keeps higher increase in recent decade.
Drug
manufacturers
Shire
in
biopharmaceutical
has
higher
potential
to
develop.
The
company
has
a
strategic focus on treatment for HIV,
hepatitis B and human genetic therapies since
2006. In HIV infection and AIDS
treatment area, there are few competitive
pressures
and
minority
entrants.
This
external
surrounding
will
bring
many
opportunities
to
Shire.
Furthermore,
the
development
environment
of
HIV
infection
and
AIDS
treatment is
very bright. The statistic shows that
the number of people
gets
diverse
HIV
will
increase
in
the
following
decade
and
the
market
needs
for
HIV
will
be
continued
growth
in
2009.
The
company
believes
they
can
obtain
breakthrough
on
innovation
in
HIV
medicines,
because
of
the
profit
that
can
be
made
in
the
whole
world
markets.
Cigarettes
In
UK
there
are
more
than
40
companies
in
cigarettes
industry.
The
5
biggest
companies
include:
Philip
Morris,
British
American
Tobacco,
Altria
Group
Inc,
Lorillard Inc and Reynolds American.
Both of then, the capital is above $$10 billion.
Recently,
governments’ rules on smoking are increasing
restrict, which lead
cigarette
makers
have
upped
prices
and
wholesaler
discounts
are
also
cut
down
as
demand
drops. For example, federal tax on
cigarettes will raise from 39 cents a pack to
almost
$$1.01 on April 1 in American.
Many experts
claim the cost of buying tobacco products is going
up in 2009. In 2008
world tobacco
industry, Kodiak's market share in shipments
declined 0.4 percentage
point to 4 percent. Its cigarette-sales
volume dropped 8.4 percent in 2008, compared
with a 3.3 percent decline in the
overall industry. Reynolds' cigarette-market share
fell
0.9
percentage
point
during
2008
to
28.1
percent.
However,
Camel's
market
share
increased 0.3 percentage point to 8
percent and Pall Mall's market share increased 0.5
percentage point to 2.6 percent.
(3) Company conditions
Profit
comes
from
company
performance.
The
company
strategy
decision
making,
dividend,
capital
structure
and
other
useful
information
is
very
critical.
Analyzing
company condition
will help me know each shares fluctuation clearly.
Land Securities R.E.I.T
(LAND.L)
Land
securities
has
3
main
business,
they
are
retail
portfolio,
London
portfolio
and
trillium.
It
includes
shopping
centers,
retail
warehouses,
and
long-term
property
outsourcing. They own 27 shopping
centers and 27 retail parks, more than 260 million
shopper visits per year and long-term
contracts with gross income of ?
757.8m.
Their
three businesses performed well
throughout the year in 2008 and demonstrated their
market leadership credentials. The
picture below shows the LAND.L mainly income
sources in 2008.
Graph-4 LAND.L
mainly income sources in 2008
(Source: LAND.L annual report)
LAND.L’s
financing
strategy
is
to
maintain
an
appropriate
net
debt
to
equity
ratio
(gearing) to ensure that asset level
performance is translated into enhanced returns
for
shareholders
while
maintaining
an
appropriate
risk
reward
balance
to
accommodate
changing
financial
and
operating
market
cycles.
The
company
has
now
generated
compound
annual
growth
of
14.6%
since
2004.
The
basic
earnings
per
share
were
288.80p, compared to earnings per share
of 153.59p in the prior year, the change is
predominantly.
The dividend of LAND.L was recommending
a final dividend payment of 16.0p per
share.
Taken
together
with
the
three
quarterly
dividends
of
16.0p,
their
full
year
dividend will be 64.0p
per share, compare with 2007: 53.0p, there is a
20.8% increase.