Abstract

This research work is based on addressing the applicability of stock valuation by Cameroon agricultural enterprises, “a necessary aspect”. Mainly secondary data from Note-info-SOCAPALM and Vivendi annual report 2012 are used and the research work uses financial ratios, tables and descriptive statistics to analyze the data obtained. Going by our result,

In the relation between the EPS and voting right of SOCAPALM‘s managerial bodies, we observed that there exist a positive relationship between these indicators. It therefore helps us to conclude that as the EPS changes, it also lead to changes in the voting rights of the company, as a positive change for both and also as a negative change respectively.

Furthermore, EPS comparison with growth rate also brings about a positive significant in their relationship. This can therefore made use to conclude that there exist a positive relation with these on the performance of the company.

This also goes for the ROA and EPS on the performance of SOCAPALM

CHAPTER ONE

INTRODUCTION

1.1 Background of the study

In finance, valuation is the process of estimating the value of something. Items usually valued are financial assets or liabilities. Such assets include the investment in marketable securities such as stock, options, business enterprises or partent and trade marks or on liabilities such as bonds issued by a comapny.

Concerned with stock valuation, it is the method of calculating the theoritical values of companies and their stock whereby its main use is to predict future market prices or more generally, potential market prices and thus to profit from price movement. Stock that are judged overvalued are sold while stock that are judged undervalued (with respect to their theoritical value) are bought, in the expectation that would on the whole rise in value while overvalued stock will on the whole fall.

In the view of fundamental analysis, stock valuation based on fundamentals aims to give an estimate of their intrisic value of stock based on predictions of the future cash flows and the probability of the business. Fundamental analysis may be replaced or augmented by market ctiteria, what the market will pay for the stock, without any necessary notion of intrisic value. These can be combined as predictions of future cash flow/profits (fundamantal), together with what will the market pay for these profits ? these can be seen as the ¨supply and demand¨ sides that is one underlies the supply (of stock) and one drives (market) the demand for stock ? this is known as the market valuation of stocks.

In the view of noted economist like John Keynes stock valuation is not an estimate of their faire value of stocks, but rather a convention, which serve to provide the necessary stability and liquidity of investment, so long as the convention does not breakdown, underpinned by an illiquid business and its illiquid investment such as factories.

The recent price transaction for companies in the stock exchange, which is seen as a transactional approach to stock valuation, to be able to boost in their activities thus it can be concluded that stock valuation are needed for reasons such as investment analysis, capital budgeting, merger and aquisition transactions, financial reporting, taxable events to determine the proper tax liability and litigation.

In this regard, the applicability of stock valuation such as in the Société Camerounaise de Palmeraies (SOCAPALM) would be our case of study having in mind ttheir growth, performance and investment capacity.

1.2 Problem Statement and Justification of Study

The concept of stock valuation is quite an important concept in the financial markets as stock valuation is the method of calculating theoritical values of companies and their stocks. The survival of the Société Camerounaise de Palmeraies (SOCAPALM) which is our case study has been deteriorating over the past years. This is because of the poor and improper management of funds available, stock and capital invested.

This has gone far in obsructing the performance and activities of this company. With the changes in the stock exchange, it therfore necessitates a call for concern. Hence, the main question here concists of what are the effects of stock valuation on Société Camerounaise de Palmaraies (SOCAPALM).

1.3 Research Questions

Given our main research question as above, we can develop the following as our sub-question;

1. What is the effect of stock valuation of SOCAPALM on its managerial bodies?
2. What is the impact of stock valuation on SOCAPALM production?
3. What is the impact of stock valuation on the raising of capital by SOCAPALM?

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