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Morgan Stanley

Morgan Stanley. Sherlyn Lim RCPM 16 th March 2006. Outline. History Macro Review Business Company Life Cycle Swot Analysis Industry Comparison Financial Projection Sensitivity Analysis Recommendation. History. Morgan Stanley

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Morgan Stanley

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  1. Morgan Stanley Sherlyn Lim RCPM 16th March 2006

  2. Outline • History • Macro Review • Business • Company Life Cycle • Swot Analysis • Industry Comparison • Financial Projection • Sensitivity Analysis • Recommendation

  3. History • Morgan Stanley • 1933 – Glass Steagall forces JP Morgan & Co. to chose between commercial and investment banking business • 1935 – Henry S. Morgan and Harold Stanley leave JP Morgan & Co. to form Morgan Stanley and Co. • 1941 – Joins New York Stock Exchange and enters brokerage business • 1986 – Morgan Stanley Group becomes a publicly listed company • 1997 – Merger of Morgan Stanley and Dean Witter

  4. History • Dean Witter • 1924 – Opens first office in San Francisco • 1950s – Expands through acquisition and mergers • 1972 – Goes public • 1978 – Mergers with Reynolds & Co. in largest industry merger to date • 1981 – Joins Sears, Roebuck • 1987 – Launches Discover • 1993 – Sears Spins of Dean Witter Discover • 1997 – Merger with Morgan Stanley

  5. Holdings • 400 Shares • Bot: 11th April 2001 • Paid : $57.1898 • Total: $23,516.00 • % of portfolio: 8.3157% • Current Price: $60.31 • Gain: 5.46%

  6. Business • Institutional Securities • Investment banking • Financial advisory services • Merger and Acquisitions, Restructuring advice • Sales and trading • Fixed income securities • Equity securities

  7. Business • Retail Brokerage • Individuals , Small to medium size business • Brokerage and investment advisory services • Financial and wealth planning • Annuity and insurance products • Credit and other lending products • Banking and cash management • Retirement plan services • Trust services

  8. Business • Asset Management • Global asset management product and services • Equity, • Fixed income • Alternatives

  9. Business • Discover • Discover branded cards • Other consumer finance products and services

  10. Key Statistics • Fiscal Year Ends : 30 Nov • Management Effectiveness: • Return on Assets (ttm) : 0.63% • Return on Equity (ttm) : 17.21% • Profitability: • Profit Margin (ttm) : 18.44% • Operating Margin (ttm) : 33.16%

  11. Macroeconomic Cycle • Performance is cyclical and dependent upon economy

  12. Macroeconomic Cycle

  13. Company Life Cycle • Continuous reinvention 1986: Morgan Stanley Group becomes publicly listed 1987: Dean Witter launches Discover nationally 1997: Merger of Morgan Stanley and Dean Witter 1924: Dean Witter opens office in San Francisco 1935: Formation of Morgan Stanley 2005-2006: Management shakeup; new business model 2004-2005: Falling stock price, attributed to market and management

  14. SWOT Analysis

  15. Chart Comparison

  16. Direct Comparison

  17. Multiple Phase DDM • Three Phases • 2006 – 2010 --- Based on earnings forecast • 2011- 2020 --- Based on dividend growth • 2021 – 2020 --- Based on dividend growth • Terminal Value • Forecasted Price : $61.76

  18. Sensitivity Analysis

  19. P/E Approach Share Price: $62.72

  20. Recommendation • Company has been able to reinvent itself over its history • It is one of the premier banks in the world • Buy recommendation would be have been made • % of financials in portfolio = 21.2% • % of financials in S&P 500 = 21% • Hold: 400 Shares

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