Tsx Composite Stock Assessement

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Table of Contents

1.        Company Profile        2

2.        Share Price and Performance        4

3.         Aspen Oilsands Project Annoucement        6

4.        Dividend        7

5.        Conclusion        8

1. Company Profile[pic 6]

1. Breif About Company

Imperial Oil Limited is Canada’s second largest oil extracting company; it deals in exploration, production and selling of crude oil & natural gas in Canada. Imperial Oil produces oil and natural gas, refine it and transport for distribution. Imperial Oil has established a system for distribution and movement of wholesale and packed petroleum products from refineries to market by pipeline, rail, road transport and tankers. Imperial Oil operates natural gas liquids and products pipelines in Alberta, Manitoba, and Ontario, in addition to share in crude oil and products pipeline companies. Imperial Oil sells petroleum products under the brand name of Esso and Mobil by means of around 1,800 Esso retail sites to its users. Imperial Oil also operates Chemical segment, which manufactures and markets various petrochemicals and polyethylene, including benzene, aromatic and aliphatic solvents, plasticizer intermediates, and polyethylene resins.

1. Industry Overview

Imperial Oil operates in Energy Sector of Integrated Oil and Gas Industry. Canada has world’s third largest crude oil reserves and nineteenth largest natural gas. Total crude oil reserves were estimated to be 172.5 billion barrels (at year-end 2013) and natural gas reserves were estimated to be 71 trillion cubic feet (tcf) (at year-end 2012). Canada’s energy industry employed directly and indirectly around more than nine hundred thousand (900,000) workers across the country and the stock of foreign direct investment in the energy sector reached $182 billion. Recently foreign investments are made to Oil and Gas industry by China, Japan, France, Norway and Malaysia.

1. Shareholding

Imperial Oil is a large company with a market capitalization of CA$34.0b, owned by a public company, institutions and general public. Breakup of the shareholding is as follow:

Exxon Mobil Corporation holds 69% shares, which is American multinational Oil and Gas Corporation. Whereas, 20% shares are held by institutions this may designate that the company may has a certain degree of credibility in investment community. 11% shares are held by general public, which may not be sufficient to influence a policy decision but enough to make a collective impact.

1. Listing on Stock Exchange

Detail of Imperial Oil’s listing on stock exchange is as follow:

1. Share Price and Performance

1. Share performance during last six months

Common Shares of Imperial Oil are traded on TSX; overview of share price of shares of the company is summarized in table below:

Table above shows that during last six months, from May-2018 to Oct-2018 highest share price of the company was 42.96 CAD at the end of September, whereas as lowest price was 37.96 also at the end of September 2018. However average share price of the company during the last six months was 42.37 CAD. During last six months, IMO has seen growth of 10,000 and generated a return of 23.62%. Current discount on share value is 15% as share price is 39.58 CAD versus future cash flow value of 46.75 CAD. Imperial Oil’s share price is below the future cash flow value but not at a moderate discount, which is less than 20%.

Based on the discounted cash flow valuation Imperial Oil seems to be puffed up by 43% at present. The stock is currently priced at CA$37.99 on the market compared to its value of CA$26.53, which means investors do not have the opportunity to buy Imperial Oil Share at a good price. Likewise, Imperial Oil’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. If the share price should eventually reach its true value, a low beta could suggest it is unlikely to rapidly do so anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range.

1. General Trend Prevailing in S&P /TSX[pic 8]

Returns for the TSX Composite Stock Index have been pretty healthy and positive which helped TSX being ranked at sixth out of twenty three best performing Stock Exchanges. During May of 2018, the S&P TSX Index had a rank of 6 with a return of 2.91%. Highest ranked index during the month of May 2018 was the S&P 600 Index, which showed return of 6.34%, whereas, vilest performing index during the same period was the Mexico IPC Index with a return of -7.65%. Overall trend in the market during last six months have been bullish with composite index reaching an all-time high of 16,412.94 during the month of January 2018, whereas, trend of the market can be ascertained from the data provided in the table below:

1. Performance of IMO as compare to industry

Imperial Oil performed very well during the last one year in terms of return. IMO returned 0.9% as compared to Canadian Oil and Gas industry which returned -9%, whereas whole overall market returned -2.2%. Price volatility of IMO remained comparatively less volatile with beta 1.04.Imor is overvalued as compared to both Oil and Gas Industry and overall Canadian Market with P/E Ratio of imperial being 24.78 in comparisons of 15.09 and 13.77 being the P/E ratios of Canada Oil and Gas Industry and Canada Market respectively.