Morgan Stanley

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