牛津布鲁克斯大学本科学位论文参考样本全文.doc

Oxford Brookes UniversityResearch and Analysis ReportProject Topic 8An analysis of the financial situation of F. Motor Co., Ltd.By: SIMON LEESeptember 20054523 WordsCONTENTS PAGE INTRODUCTION.1TOPIC CHOSEN.1REASONS FOR CHOOSING THE TOPIC.1AIMS AND OBJECTIVES OF THE REPORT.1INFORMATION CATHERING.3SOURCES USED AND REASONS.3METHODS USED TO COLLECT INFORMATION. 4ANALYSIS. 5ANALYSIS OF INFORMATION.5PRESENTATION OF FINDINGS9CONCLUSION. 12APPENDICES. 14BIBLIPGRAPHY. 17IIINTRODUCTION TOPIC CHOSENThe auto business is growing in China at a considerably higher rate than the GDP, production has been up by 36% in the first eight months in 2003 (2,781,800) comparing to the same months in 2002, (The China Association of Automobile Manufactures). This report analyses the financial situation of F.Motor Co., Ltd. (FMC). FMC is a rapidly developing Chinese auto manufacturer. The analysis is made from an investors point of view. By both quantitative and qualitative analysis methods, in a way of comparison with itself before and its counterparts in the same fields in china, the author presented a detailed and complete analysis of its strengths, weaknesses, opportunities and threats. FMC is a company listed on Chinese Shanghai Stock Exchange.REASONS FOR CHOOSING THE TOPICThe reasons why the author chose to study the topic of analyzing the financial situation of FMC were as follows:1. Chinese auto industry has greatly developed since China entered the World Trade Organization in the year of 2000. As a famous auto manufacturer developing with high speed in these years, FMC was picked as the 55th company in the top 100 powers and as the second powerful auto manufacturer listed in Chinese stock market by the famous journal “Fortune”(Shanghai Securities Daily, 2003). It moved from 25th positions of all auto companies listed in stock exchange and became the 2nd ranked auto-company in the year of 2003. It has achieved tremendous growth. As a representative in the Chinese auto industry, FMC has great potential for further development.2. Since 2004, its products have expanded to include commercial vehicles. There are big comparative advantages for Chinese commercial vehicle industry in the world market (Interim Report, 2003). Light truck is one of few products in China with property right. FMC is the biggest light truck manufacturer in China. And it has a big share in the market (China Auto Annals, 2003).3. In September of 2003, FMCs signed “an overall cooperation strategy agreement”(Shanghai Stock Exchange Bulletin 2003) with Daimler-Chrysler which indicated that Daimler-Chrysler had entered FMC and would find many cooperation opportunities with FMC in many fields of auto manufacture in the near future as its only cooperative partner in China.AIMS AND OBJECTIVES OF THE REPORTThis report tries to provide a thoughtful analysis of the current financial situation and the future potential of FMC. The main aims of this report are:1. To understand how FMC is run, for example if the working capital is sufficient to meet its medium term objectives.2. What problems block its further development, and how the relative management levels focuses their concentration on the issues and improve management and administration of FMC.3. To better understand FMCs profitability and ability to compete, show its potential for sustained development.4. To use a SWOT analysis to analyze FMCs strengths, weakness, opportunities and threats so as to find ways to optimise its performance.5. To show FMCs returns and risks so that investors can make the well-informed investing decisions in the stock market. INFORMATION GATHERINGSOURCES USED AND REASONS1. Annual reports of FMC. These annual reports can provide detailed annual results on key data of risks, cash flows, assets, liabilities, solvency, operating costs, earnings, taxes, depreciations, amortization and profit margins, etc. The data over a continuous period of time can show the progress that FMC made timely. They are important original information used to make good analysis in financial status of a company. 2. Interim reports of FMC. Though the interim reports arent often audited by the qualified agencies, we can see how all its projects are running and how much outside environments affect the performance of FMC. Also we can compare it with the annual report of last year. They are necessary for the complete analysis of the company.3. Quarterly reports of FMC. Although the quarterly reports demonstrate the status of FMC in a shorter period of time than interim reports, they are necessary for analyst to make detailed analysis of a company. By reports of each quarter, the analyst can pursue the track of the thoughts of the managers. Besides, manager can change the project after closely monitoring how rival company goes.4. Annual reports of other main auto manufacturers in China. They can help the analyst to make comparisons of FMC with other main auto manufacturers in China in relative fields so as to locate the position of FMC in its main business portfolio. They are good yardsticks to measure FMCs performance.5. Analysts evaluation reports of FMC. They provide profound professional study results on FMC in aspects of current situations, problems met by it in company running and future prospects by the viewpoint of the skilled professionals. They are great references for the coming analysts.6. Newspaper. Comments in newspapers are sources of up to date information about the company of FMC. Along with the analysis from skilled experts, they contribute much to my analysis on the company.7. Journals. Information in relative journals gives us knowledge on the situations of both FMC and research, development and study in auto field. They help the analyst to realize the trend of auto development both in China and in the world.8. Reports made by in-house brokers and financial advisors to FMC. They have made close on-site investigation on FMC and been fully aware of the strengths, weaknesses, opportunities and threats faced by FMC. 9. Reports made by the managing levels of FMC. They contribute much to the analysis on FMC. They give the thoughts on further development direction in managing levels head. They can help the analyst to make good forecast on its future prospects.10. Student Accountant magazine and BPP manuals for papers 3.6 (ACR) and 3.7 (SFM) were also the authors background reading for the paper. They provided the author with useful ideas and ways to make such a detailed analysis on FMC. METHODS USED TO COLLECT INFORMATION LIBRARY RESEACH General readingLooked up all the information materials relative with auto field and FMC in the libraries. Generally read different books, newspapers, magazines, journals relative to the topic to understand in detail the company and its operating environments. The information materials helped me to know the situation of the auto field in the world. And the China Auto Annals provide the detailed information on all auto parts manufacturers and complete auto manufacturers. Also, abstracts, brokers reports and forecasts for all companies and 53 industries worldwide were included. Specific readingOn searching through some unclassified information materials relative to FMC in the information materials section of FMC and found detailed financial data, ownership, other descriptive information of the company and some comments from the advisors and analysts. Annual reports, interim reports and quarterly reports were all included. Libraries used for general reading and specific reading includes: City Business Library, British Library, Westminster Library, High Street Kensington Library, Beijing Library, China Library.WEBSITES VISITEDFMCs website (FMC.), 2 Chinese stock exchanges websites ( and ) and any other financial organizations websites were methods to gain important information materials. The information materials include press releases and financial reports on FMC. Though the websites provided much important information materials, but it took me long time to pick up the essential information for the analysis report from the abundant information.EMAIL AND TELEPHONEThe author sent emails and made phone calls to people in FMC and many financial institutions, which included FMC securities section, Shenyingwanguo Securities Research Institute, Guoxin Securities Research Institute, China Huading Consulting, Shanghai Stock Exchange and Shenzhen Stock Exchange.ANALYSIS F. Motor Co., Ltd.(FMC) was set up in year 1996, whose shares are mostly owned and controlled by the Chinese local government. It was listed by IPO on Chinese Shanghai Stock Exchange in June 1998. Its business includes complete auto, auto parts, farm equipments, building materials and finances. In year 2002, its sales of auto rank the 5th position in China. By the end of 2002, its auto sales had shared more than 70% of those in the city of Beijing with total assets of 5 billion yuans, yearly productions and sales of 170 thousand units and yearly turnover of 7.58 billion yuans. 80% of its business deals with auto (Ma Yuanyue, 2003). BGMC has 4 main auto product series which are Sight series light bus, Times series light truck, Aoling series light truck and Ouman series heavy truck. In the first 9 months of year 2003, sales of the 4 main product series went up by 131%, 47.3%, 197.9% and 790.2% respectively. By them, FMC has found its high growth rate in sales of the complete auto. For its further development, FMC set up its 4-step strategy in year 2001, which was as follows: Introducing Toyota Producing Style (T.P.S), Fixing a strategy management style SBU, Overall starting strategy of BIS. Undertaking internationalization strategy (Lei Yamei, 2003). With the cooperation of Daimler-Chrysler in September of 2003, FMC receives advanced technologies and quality control experiences, develops the commercial vehicles and mid heavy trucks and increase its sales in the world market by the advantages of Benz brand (Quarterly Report, 2003). ANALYSIS OF INFORMATIONThis analysis is concentrated on the financial performance of the FMC. However, there is a limitation in terms of the information and time.A. SALES REVENUE GROWTH. Gross sales revenue over the past 2 years have risen significantly from 758o million yuans in year 2002 (Y2001: 4,110m) to 13,890 million yuans in year 2003, An increase of 83.24% APPENDIX 1. Strategic placement of its products contributed greatly in the gross sales and gross margin growth in year 2003. In year 2003, the whole auto industry developed very fast with tremendous growth in China. FMC took good use of the opportunities to take effective marketing measures so as to increase sales and market share of its products. For 2003, light truck sales reached 209,800, with a growth of 44.74% compared to those sales in 2002. And sales in heavy truck reached 14,800 finding a growth of 567.3% in comparison with those sales in 2002.The sales growth of the sight series heavy truck also increased by 99.10%. All these contributed greatly to the tremendous growth of the sales revenue.B. PROFITABILITY . GROSS PROFIT MARGIN1. Gross profit margin over the past 2 years have risen tremendously from 19% in year 2002 (Y2001: 11.9%) to 32.1% in year 2003. An overall increase of 67.18%.2. Great growth in gross profit margin is due to the tremendous growth of the sales revenue and sales of 4 main series auto products. NET PROFIT (LOSS) MARGIN1. Net profit margin reached 22.7% in 2003 up 80.16%, on last years figure of 12.6% (Y2001: 10.3%).2. In 2003 operating expense and general administrative expense went up 98.4% and 60.91% respectively on the last year, financial expense went down 59.87% on the last year. Totally higher expenses reduced partly the net profit margin.3. Significant growth of sales revenue and sales of auto products contributed much to the big growth of net profit margin. OPERATING EXPENSES1. Operating expenses reached 435.1 million yuans in year 2003 up 98.4% on the figure of 219.3 million yuans in year 2002 (Y2001: 102.03m).2. Great growth of operating expenses in year 2003 demonstrated that the sales department expended much more than the last year. Most of them were expended in sales and marketing of its products, in which ads expenses and freights were very big. Compared with its big sales of the 4 main series of auto products in 2003, such high operating expenses were worthwhile.3. In the future year, FMC will seek ways to reduce sales and marketing expenses of the products under condition of not lowering the sales. . GENERAL ADMINISTRATIVE EXPENSES 1. General administrative expenses in 2003 were 416.35 million yuans while the figure in 2002 (Y2001: 186.68 m) was 258.75. An increase of 60.91%.2. Significant growth of administrative expenses in 2003 showed that the administrative levels spent much more than that in 2002 apart from the depreciation and amortization. In year 2003, FMC paid much for the financial consulting agents that help the company to purchase, sell assets, merger, find cooperation opportunities and refinance. 3. Tremendous growth in administrative expenses would remind administrative level to find ways to cut them down effectively in the coming year.C. FINANCIAL RISK1. Financial expense went down 59.87% in 2003 compared with that in 2002. The expenses in 2003 were 18.9 million yuans while they were 47.1 million yuans in 2002 (Y2001: 15.6 m), This led to interest cover increasing from 20 times (7,580*12.6%/47.1) to 167 times (13,890*22.7%/18.9), almost 8.4 times better.2. FMC had less interests burden in 2003 than those in 2002 because it gain about 210 million yuans by refinancing and it got 6 million yuans supporting its technology innovation from the local government. 3. BFMX will intend to keep the financial risk in low level.D. LIQUIDITY . CURRENT RATIOCurrent ratio for FMC is up from 0.8 in 2002 to 0.96 in 2003 (Y2001: 0.9). The data showed its ability for liabilities went up. . CASHFMC had 0.246 million yuans cash at the end of 2003, going down 48.2% on the figure of 0.476 million yuans in 2002. . CASH FLOW FROM OPERATIONS TO CURRENT LIABILITIESThis data measures the extent to which current liabilities are covered by cash flowing into the business from normal operating activities.FMC demonstrated a bit improvement going from 23.62% in 2002 to 23.90% in 2003. CASH FLOW PER SHARECash flow per share in year 2003 went down to 1.16 yuan from the figure of 1.73 yuan in year 2002. FREE CASH FLOWFMCs free cash flow cut down from 401.7 million yuans to 21.26 million yuans (Y2001: -55.48 m), a decrease of 380.44 million yuans. Though with lower free cash flow, FMC has better control over its activities that have started to show positive returns. E. RETURN . RETURN ON CAPITAL EMPLOYED (ROCE)ROCE improved from 3.8% in year 2002 to 7.70% in year 2003. The data showed that return ability of the company grew greatly in 2003. EARNINGS BEFORE INTERESTS, TAX, DEPRECIATION AND AMORTISATION (EBITDA)The EBITDA went up by 62.6% to 329.59 million yuan in 2003 from 202.64 million yuans in 2002.F. CONTROL MEASURES. CREDITORS PAYMENT (MONTHS)The data improved from 26 months in 2002 to 23 months in 2003 (Y2001:53 months). Though it is good to hold cash as long as it can, FMC seemed to have less time to pay the creditor in 2003 than it did in 2002. CURRENT ASSET TURNOVERIt improved from 6.5 times in 2002 to 4.5 times in 2003. The data demonstrated that FMC had better control over it working capital and was using it effectively more sales for every yuan of working capital used. G. EARNINGS PER SHARE (EPS)Even though the shares expanded for nearly 50% in 2003, the EPS improved for 10.57% from 0.4504 yuan in 2002 (Y2001: 0.3667 yuan) to 0.498 yuan in 2003. Actually the figure should improve for 65.85% from 0.4504 yuan in 2002 to 0.747 yuan in 2003.H. PRICE EARNINGS RATIO (PE RATIO)FMCs PE ratio in 2003 was 22.04 while it in 2002 was 22.0 (Y2001:027.0), a bit decrease. PE ratio is in the average level of the Chinese stock market.To sum up, the above quantitative analysis on the financial situation of FMC shows that the company has a very good financial status. It has very high growth rates in sales revenue, in gross profit margin, in net profit margin, in ROCE and in EPS, which demonstrates that FMC is in the period of developing in high speed. Besides, in aspects of liquidity and assets turnover, the company has stable current ratio, stable cash flow, stable cash flow from operations to current liabilities, stable creditor payment and stable current assets turnover. By the fact that expected return corresponds with the actual return, we may believe that the administrative levels know and understand the company very well, which is a very key point to administer the company well. Also, the high operating expenses and general administrative expenses have become the main issues of the company that need to be solved as soon as possible. PRESENTATION OF FINDINGS A. FMCS STENGTHS . Operating capabilities of A