(2) Meridian Energy’s Equity Beta

  • Go to “Yahoo! New Zealand Business & Finance” (https://nz.finance.yahoo.com/) and search for information that you can use to un-lever the beta of Contact Energy and re-lever it to obtain Meridian Energy’s equity beta. The tickers for these two firms are CEN.NZ and MEL.NZ. Estimating Meridian Energy’s equity beta involves four main steps. First, obtaining the market capitalisation of each firm as of 27th You need to input the ticker of each firm in the “Look Up” box and click enter to go to the main Yahoo!Finance web page of each firm. Click on “Historical Prices” on the left hand side of the page and obtain the closing price (“Close”) on 27th April 2016. Click on “Key Statistics” on the left hand side of the page and obtain total number of shares outstanding from the right-hand-side of the page (“Shares Outstanding”). Second, obtain the book value of net debts from the most recent balance sheets. Third, un-lever the beta of the comparable company (CEN.NZ in this case) to obtain the asset beta. Fourth, re-level the industry asset beta to the leverage ratio of company that you are valuing to obtain its equity beta. Record your answer in the table below. Show your answers to debt ratios and betas to four decimal points and other answers to two decimal points.
Closing Price on 27th April 2016(NZD)    
Shares Outstanding (NZD million)    
Market Capitalisation (NZD million)    
Latest balance sheet date    
Short/Current Long Term Debt (NZD million)    
Long Term Debt (NZD million)    
Cash and Cash Equivalent (NZD million)    
Net Debt (NZD million)    
E/(D+E) (using net debt and market cap.)    
D/E (using net debt and market cap.)    
Equity beta    
Asset beta  
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