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Business analysis of China Changcai Company
company¡¯s prospect? Will its stock be stopped transaction in the SSE in a half year?
The Framework of Analysis Report
Here, We set out our analysis outline for your reference,
Business Environment & Strategy analysis
Our purpose of this part is to identify key point drives and business success and risks, include Business Environment, Company Strategy Analysis (Industry, Competitive Company Analysis)
Accounting Analysis
The purpose of this section is to solve the comparability and distortion problem for financial statements, include introduce the Accounting policy adopted, Auditor¡¯s report & opinion and accounting adjustment suggested.
GENERAL INTRODUCTION
Finance Analysis
We will use ratio & cash flow analysis to assess the company¡¯s performance and sustainability, include analysis of Sources and Uses of fund, Profitability Analysis, Liquidity and Solvency, as well as Risk Analysis
Prospective Analysis
At this stage we will try to based on the above analysis and the latest information to make a pro forma financial statement for 2003 and further forecasting the company¡¯s prospects
BUSINESS ENVIRONMENT & STRATEGY ANALYSIS
Business Environment
The effect of national policy
Following the direction of the 16th Party Congress and under the guidance of a series of national policies such as pushing the increase of domestic demand actively and motivating consumption, enlarging the investment in agriculture and improving the rural economics with efforts, the degree of mechanization in agriculture has been enhanced continuously and the collective demand in small type of diesel engine has been increased to a great extent from the beginning of 90s.
Under the circumstance of the stable increase of national macroeconomics, conducted by the west exploitation policy and affected by the rapid increase of national key projects investment, the total demand of small type of diesel engine begin to rise, which motivating and pushing the whole small type of diesel engine industry to keep stable development. The increase range is about 8% and the price index of total output and sales revenue is above 10%. In recent two years, with the competition becomes fiercer and fiercer, though there still has certain increase of total number of production and sales, the general economic efficiency of the whole industry has declined, for the low price and high cost.
Industry Analysis
General Situation in the Industry
The China¡¯s production and sales of small type of diesel engine rank the first in the world. The annual outputs reaches about 6.5 million sets, appropriately taking 70% of the world total output, also dominate the international market of small type of diesel engine. With decades of hard working, there has established almost completed production networks and it brought along many components and parts manufactures.
In 2002, the enterprises of small type of diesel engine achieved industrial general production value (real price) 15.286 billion, sales 15.047 billion, industry addition value 2.346 billion, compared to the same period of last year with increase of 15%, 13.9%, and 4.7%, respectively. The total output of diesel engine were 5.8696 million sets and total sales were 5.8542 million sets, compared to the same period of last year with increase of [next page]