Commodities Trading Spreadsheet in Excel by kfh61929

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									Morgan Stanley
      Presented by:
      Abe Khorshid
        Ronnie Ng
  (Presented 4-10-2001)
Recommendation: BUY
              The Morgan Stanley Vision
To be the world’s first choice in achieving financial aspirations.
               Overview
Morgan Stanley is a preeminent global financial
services firm that maintains market positions in
each of its businesses — Securities, Asset
Management, and Credit Services. The company
combines leadership in investment banking
(including underwriting public offerings of
securities and mergers and acquisitions advice)
and institutional sales and trading, with strengths
in providing investment and global asset
management services as well as quality consumer
credit products.
                    Profile
   NYSE symbol: MWD
   Recent Price: $54.77
   52 week low/high: $44.10 - $110.00
   P/E: 11.63
   Shares Outstanding: 1.11 billion
   Market Cap.: $60.9 billion
   2000 Div. Per Share: $.80
   2000 ROE: 31%
   Historical 5 Year Net Revenue CAGR: 21.8%
   Historical 5 Year Net Income CAGR: 28.8%
                   1Q 2001 Earnings
   Reported EPS of $.94, which is down 30% from 1Q 2000
   Securities business net income dropped 37%
    -   Reflects the impact of difficult markets for equity underwriting, and
        principal investment activity — partially offset by strong
        performances in fixed income and equity sales and trading.
    -   1st in announced global M&A deals (39% market share)
   Achieved ROE of 23% for the quarter
   Declared quarterly dividend of $.23 per share
   The Company has repurchased approximately 9 million
    shares of its common stock since the end of fiscal 2000
   Non-staff costs fell 7.5% between 4Q 2000 and 1Q 2001
                Securities
 Includes Investment Banking, Institutional
  Sales & Trading, Full-Service Brokerage,
  and Principal Investing Activities
 Comprises 81% of total sales and 74% of
  total profit
 Net revenue and net income grew at 22%
  and 10%, respectively, in 2000
 #1 in Institutional Investor’s Yr 2000
  Global Research Poll for 4th straight year
    Securities - Investment Banking

   2000 Total Fees: $4.88 billion
    - Comprises 18.5% of total net revenues
   M&A fees account for 43.8% of total fees
   Equity Underwriting fees account for 35.7%
   Debt Underwriting fees account for 20.5%
   #1 in U.S. announced M&A deals for 2000
   #1 in global M&A deals for Q1 of 2001
   #1 in European M&A deals for Q1 of 2001
Securities - Principal Transaction
 Includes Equity, Fixed Income, Foreign
  Exchange, and Commodities trading
 Total revenues for 2000: $7.4 billion
  - Comprises 28.7% of total net revenues
 Revenues increased 27% in 2000
  - fueled by 54% increase in equity trading
  revenues
 Includes private equity arm
           Asset Management
 Provide wide range of investment products for
  institutions and individual investors
 - Van Kampen Mutual Funds
 - Unit Trusts
 - Insurances and Annuities
 Net Revenues of $2.5 billion in 2000
  - Comprises 9.6% of total net revenues
  - Grew at 20% from 1999
 Ranks among the top eight global active asset
  managers with over $500 billion of assets under
  management
                Credit Services
   Operated by Discover Financial Services
   Includes Discover Card, MS Card, and other
    proprietary general purpose credit cards
   Net Revenues of $3.9 billion in 2000
    - Comprises 14.8% of total net revenues
    - Grew at 11.3% from 1999
   Only top-tier investment bank with credit card
    business
    Current Economic Environment
   Unemployment rose to 4.3%, higher than
    projections
   Consumer confidence was up for the first time in
    the past five months
   Deteriorating economic environment
    - Fear of recession in US and Japan
    - Falling corporate earnings
    - Corporate layoffs across the board
   Interest rate friendly environment
   Equity bubble has popped in the US
    - Hard to raise capital through equity markets
    - M&A slowdown
Employment Data
          Industry Environment
   Firms are focusing on controlling costs
    - Recent layoffs in many brokerages
   M&A deal flows are slowing down
   Deteriorating equity backlog of underwriting
   Consumer credit is an increasing concern
   Increased fixed income liquidity in wake of fed
    easing
                           Position In Industry
                                      IB League Tables 2000

              U.S. Announced M&A Advisor Rankings
                                                                                                          Amt.         # of
           Rank     Advisor                                                                              ($bln)       Deals


             1 Morgan Stanley Dean Witter 542.56 197
             2 Credit Suisse First Boston 517.51 398
             3 Goldman Sachs                                                                  513.27 255
             4 Salomon Smith Barney                                                           408.47 209
             5 Merrill Lynch                                                                  264.54 165

Source: CommScan M&ADesk
Period: January 1, 2000 - November 30, 2000
Criteria: Excludes withdrawn deals, Includes all M&A deals involving either a US target, divestor or acquiror, spin-offs and split-offs
Credit: Full credit to both acquiror and target advisor
                          Position In Industry
                                    IB League Tables 2000
          Global Equity and Equity-linked Underwriter
                           Rankings
                                                                              Total     # of
Rank   Underwriter                                                       Amt.($mm)     Deals


 1 Goldman Sachs                                                     80,776.85        184
 2 Morgan Stanley Dean Witter                                        58,715.64        166
 3 Merrill Lynch                                                     56,257.99        154
 4 Credit Suisse First Boston                                        35,376.05        171
 5 Citigroup                                                         34,153.65        161
 6 Deutsche Bank                                                     27,403.54        101

Source: CommScan EquiDesk/CapitalData
Period: January 1, 2000 - September 30, 2000
Credit: Total deal size is apportioned to bookrunner (minimum of 3
deals)
           Historic Performance
          Total Shareholder Return Since Merger

250.00%

200.00%

150.00%
                                                       Return

100.00%

50.00%

 0.00%
            MWD           S&P 500      S&P Financial
             Historic Performance
          Diluted Earnings per Share
      5
      4
      3
EPS




                                                             EPS
      2
      1
      0
          1996   1997   1998          1999   2000   1Q2001
                               Year
                        Historic Performance

                        Dividends per Share
            1
           0.8
Dividend




           0.6
                                                                     Div
           0.4
           0.2
            0
                 1996    1997   1998          1999   2000   1Q2001
                                       Year
1 Year Stock Performance
            Excel Spreadsheet
   Financials

   Revenue Composition

   Ratios and Comparisons

   Valuation Model
Relative Price-to-Book
Relative Price-to-Earnings
             What Analysts Say…
   ―MWD should be trading at a premium, given its leadership in
    M&A and equity underwriting.‖ -- Goldman Sachs
   Smith Barney rates MWD as a BUY with a target price of $90
   ―The top franchises in global finance, with a breadth of
    competencies and product offerings to which every bank
    aspires to have.‖ – CSFB
   First Union reiterates STRONG BUY rating and target price of
    $90, 20x 2001 EPS estimate
   ―MWD remains the most attractively valued traditional broker
    dealer. Rated BUY rating with a $75 target.‖ --Merrill Lynch
        Why Morgan Stanley?
 Leading share in M&A and equity underwriting
 Ahead of competition in cost reduction
 Diversification of revenue sources
 Unbeatable capability/financial strength
 - Larger asset base than other top tier IBs
 Solid track record
 - Consistent growth in EPS and ROE
 Trading at a very attractive value
 Adds diversification to our client’s portfolio
        Recommendation

 BUY   400 shares at the market!
 Total projected market value:
  $22,000

								
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