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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

Morgan Stanley

Sherlyn Lim

RCPM

16th March 2006

outline
Outline
  • History
  • Macro Review
  • Business
    • Company Life Cycle
    • Swot Analysis
  • Industry Comparison
  • Financial Projection
  • Sensitivity Analysis
  • Recommendation
history
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
history1
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
holdings
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%
business
Business
  • Institutional Securities
    • Investment banking
      • Financial advisory services
      • Merger and Acquisitions, Restructuring advice
      • Sales and trading
    • Fixed income securities
    • Equity securities
business1
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
business2
Business
  • Asset Management
    • Global asset management product and services
      • Equity,
      • Fixed income
      • Alternatives
business3
Business
  • Discover
    • Discover branded cards
    • Other consumer finance products and services
key statistics
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%
macroeconomic cycle
Macroeconomic Cycle
  • Performance is cyclical and dependent upon economy
company life cycle
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

multiple phase ddm
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
p e approach
P/E Approach

Share Price: $62.72

recommendation
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