Catalog. I-1 Company background...1. I-2 Financial analysis...4. I-3 Benchmarking...9. I-4 Export analysis I-5 Strategy analysis...

Transcription

1 Catalog I-1 Company background...1 I-2 Financial analysis...4 I-3 Benchmarking...9 I-4 Export analysis...14 I-5 Strategy analysis...16 I-6 Competitiveness analysis

2 I-1 Company background Sample One Co., Ltd. Address: Dantu Economic Development Zone, City 114, Province, P. R. China Tel: +86--XX; +86-X Person to contact: Mr. Zheng (Manager), Mr. Wu Website: Company background Co., Ltd. () is one of the subsidiaries of Chemical Corp. (). has more than XX-year experience in producing petrochemical products. It is the major petrochemical solvent producer in Asia, and the biggest private petrochemical warehousing and storage company in XX. The company is principally engaged in producing methanol series of products and sales of, and. has three subsidiary companies in Mainland China, including, and. Organization chart of Chemical Corp: Shareholders General Meeting Supervisory Committee Board of Directors Secretariat of the Board Executives of Corp Audit Committee Strategic Committee Remuneration & Performance Evaluation Committee Division Division Chemical Division Sales Division Functional Divisions Refineries & Chemical Branches company company company company company company company company company company 1

3 Table Group members of, April 2012 No. Members Location Launch time Main products 1 2 Qatar 1995 l, MTBE Jiangsu 1997, The U.S Guangdong N/A Polysilicon Source: CCM was established in 199 with total investment of USD million), and it covers an area of square meters. The plant is located in Zhenjiang, Jiangsu Province and has a -tonne dock. It is mainly engaged in the production of deep-processed products of methanol series like ( t/a), ( t/a), ( t/a), MIBK ( t/a) and so on. It is the biggest and manufacturer in China, with high quality products in the leading position in the industry. - History of Be established in 199X Began the production of and in 200X Began the production of in 200X Expansion of and plants was completed and the expanded plants began the production in 200X; the expanded plant began trial production in 200X Expansion of MIBK plant was completed and the production also started in 200X Sample Two Co., Ltd. Address: No. 5 Huoju Street, Hongwei District, City, 003, Province, P. R. China Tel: X Website: 1) Company background Co., Ltd. () is a subsidiary of Company Limited () which is the largest producer and distributor, playing a dominant role in the industry in China. has convenient transportation: kilometers from port, kilometers from port and kilometers from International Airport. 2

4 As the first and the largest producer in China, has experience of about 30 years in production. Table VIII Company info of Time of establishment Enterprise type Staff Registered capital, USD Area, square meters Total capital, USD International approval Annual sales, USD Source: CCM 3

5 I-2 Financial analysis Sample Table IV Balance sheet of X in X ITEM 31-Dec-XX 31-Dec-XX Unit: thousand USD Unit: thousand USD Current assets: Cash Transaction financial asset Notes receivable Account receivable Account paid in advance Interest receivable Other receivable Inventories Non-current assets due within one year Other current assets Total current assets Non-current assets: Loans and advance Financial assets available for sale Held-to-maturity investments Long-term account receivable Long-term equity investments Investment property Fixed assets Construction in progress Construction material Fixed assets disposal Bearer biological asset Oil assets Intangible assets Development expense Goodwill Long-term deferred expenses Deferred income tax assets Other non-current assets Total non-current assets Total assets Current liabilities: Short-term loans 4

6 Transaction financial liabilities Notes payable Accounts payable Accounts received in advance Employees compensation payable Taxes payable Interest payable Other accounts payable Non-current liabilities due within one year Other current liabilities Total current liabilities Non-Current liabilities: Long-term loans Bonds payable Long-term payable Specific-purpose account payable Provisions for contingent liabilities Deferred income tax liabilities Other non-current liabilities Total Non-Current liabilities Total liabilities Owners' equity Paid-in capital Capital surplus Surplus reserves Undistributed profits / (Accumulated losses) Total owners' equity TOTAL LIABILITIES AND OWNERS' EQUITY 5

7 Table IV Income statement of X in X ITEM 31-Dec-XX 31-Dec-XX Unit: thousand USD Unit: thousand USD Operating revenue Less: Cost of sales Interest expenses Taxes and associate charges Selling and distribution expenses Administrative expenses Financial expenses Losses on the asset impairment Add: Gain(loss) from investment Operating profit / ( loss) Add: Non-operating income Less: Non-operating expenses Total profit / (loss) Less: Income tax Net profit / (loss) Table IV Cash flow statement of X in X ITEM Unit: thousand USD 1. Cash flows from operating activities Cash received from sale of goods or rendering of services Refund of taxes and levies Cash received related to other operating activities Sub-total of cash inflows Cash paid for goods and services Cash paid to and on behalf of employees Payments of taxes and levies Cash paid relating to other operating activities Sub-total of cash outflows Net cash flows from operating activities 2. Cash flows from investing activities Cash received from disposal of investments, other than subsidiaries Cash received from disposal of subsidiaries Cash received from returns on investments Net cash received from disposal of fixed assets, intangible assets and other long-term assets Cash received relating to other investing activities 6

8 Sub-total of cash inflows Cash paid to acquire fixed assets, intangible assets and other long-term assets Cash paid to acquire investments, other than subsidiaries Cash paid to acquire subsidiaries Cash paid related to other investing activities Sub-total of cash outflows Net cash flows from investing activities 3. Cash flows from financing activities Cash received from capital contributions Cash received from borrowings Cash received relating to other financing activities Sub-total of cash inflows Cash repayments of amounts borrowed Cash payments for interest expenses and distribution of dividends or profits Cash payments relating to other financing activities Sub-total of cash outflows Net cash flows from financing activities 4.Effect of foreign exchange rate changes on cash and cash equivalents 5.Net increase / (decrease) in cash and cash equivalents Table IV Financial analysis of X in X Analysis of profitability Operating Profit Margin Net Profit Margin Return On Assets Return On Equity Analysis of debt paying ability Current Ratio Debt to Total Assets Ratio Times-interest Earned Ratio Analysis of running ability Total Assets Turnover Fixed Assets Turnover Current Assets Turnover Analysis of growth ability Sales Growth Rate Operating Profit Growth Rate Net Profit Growth Rate 7

9 Remark: Current Assets Turnover= sales/(total current assets 200X+Total current assets 200X)*2 In 200X, the financial performance of the company was poor. The operating profit margin was XX% year on year, sales value growth rate was XX% and operating profit growth rate was XX%, but other data were negative. The net profit was lower than that in 200X, down % over the previous year. Only the structure of assets and liabilities and running ability were reasonable in the company in 200X. Its capital was utilized effectively, as the ratio of its debt to total assets was XX%, total assets turnover was XX, fixed assets turnover was XX and current assets turnover was XX. The main problem of the company was its high cost of sales and non-operating expenses, so the company has to reduce these cost and expenses to increase the profit in the future. 8

10 I-3 Benchmarking Estimation of raw material cost The costs of raw materials are based on China s market prices in Oct 200X and Jun 200X Table IV Estimation of raw material costs of XX in No. Materials Unit Price (USD/kg) Unit Cost Price (USD/kg) Unit Cost Consumption Oct (USD/kg para) June 2006 (USD/kg para) Glacial acetic acid 3 Activated carbon 4 Sodium metabisulfite 5 Deionized water (kg/kg) Oct June 2006 Total / / / Note: 1 Calculated based on the yield of starting from which is 90%. Equipment in is much advanced than that in XX. One of its production lines (XXt/a) was launched in 200X. CCM International estimates the yield of in is higher than that in. disclosed it purchased at a price of USDXX/t in 200X, lower than the average level of market price. Most of its is purchased from Co., Ltd. and. According to, 1 tonne of deionized water is needed to produce 1 tonne of. The water is consumed in decolorizing and filtrating processes. 9

11 Estimation of manufacturing cost Table IV Manufacturing costs of production (Unit: USD/kg) No Item Unit Cost (Oct. 2008) Unit Cost (June 2006) 1 Raw Materials 2 Utilities1 3 Labor2 4 Package3 5 Manufacturing direct + indirect (mainly maintenance) 4 Total Note: 1 Utilities include water (for cooling), electricity and steam. The workshop is set up in a four-store building. Raw materials are transported to the forth store. After acetylating, crude is transported to the forth store for decolorizing and filtrating. In addition, the degree of automation is high. CCM International found few steps are operated by manpower. The consumption of electricity is high, especially compared with. disclosed that XX tonnes of steam are consumed to produce one tonne of. 2 Average salary for the labor in is USD/month in 200X. There are labors in, but of them are involved in production of. The rest are involved in (XX), (XX), power plant (XX) and DC grade (XX). 3 reveals that in whatever package method (woven bag or paper drum), the quoted price is the same. produces paper drum by itself and the manufacturing cost is low (about USD per 25kg paper drum in 200X). In addition, all in warehouses are packed in paper drum. Therefore, CCM International estimates its package fee based on paper drum. 4 Maintenance is about XX% of cost of purchasing equipment. The capacity of in 200X remains the same as that in 200X. However, its output in 200X has increased over the previous year, though the market of is not so prosperous. There is little difference in unit consumption of raw materials, yield, number of labor and package specification compared with those in 200X. 10

12 Estimation of management cost Because has borrowed lots of money from banks and purchased many new facilities and high standard office environment, the management cost of is much higher than that of. Considering that the process of (starting from ) is mature in China, management cost will be a crucial factor in analyzing profits of Chinese manufacturers. Table IV Estimation of management cost of (Unit: USD/kg) No. Item Unit Cost (Oct. 2008) 1 Salary cost of management staff and other auxiliary staffs1 2 Materials cost for management2 3 Interest on loan3 4 Transportation cost4 5 Amortisation of fixed asset5 6 Distribution cost6 7 Cost for three-waste treatment7 Unit Cost (June 2006) Total Note: 1There are management staffs and other auxiliary staffs. Average salary of them is USD/month. 2 The office equipments in are expensive. Decoration is luxury. The cost should be very high. 3 borrowed USD million from bank of China. The interest rate is about %. 4 Most of are exported via port. The transportation fee is USD/t, and the quoted price is for port. 5 The shortest time for amortization of fixed asset is XX years by the government. 6 Distribution cost is XX% of total revenue(total revenue = Unit price x Sales volume = USD/t x XX t= USD) 7 disclosed its cost on treating waste (mainly water) is about USDXX per tonne of waste. adopts evaporation method to treat waste. Estimation of production cost Table IV Estimation of total production costs in (Unit: USD/kg) Item Oct. 200X June 200X Manufacturing costs Management Costs Total production costs Except for change of USD/RMB exchange rate, there are some other differences between cost in 200X and in 200X as follows: Price of X has increased and price of and activated carbon has the same change of the change in. Increase in price contributes most in the increasing 11

13 manufacturing cost. As that of, increasing cost of utilities is mainly caused by rising price of water and electricity. Total management cost in 200X is nearly the same as that in 200X, but the output in Oct 200X is higher than that in Jun 200X. Then the unit management cost is lowered in Oct 200X. Estimation of profit The profit of in is estimated based on the actual data from the factory and on CCM International s estimation as follows. offers the export price at USD/kg FOB in Oct 200X. 12

14 Table IV Profit estimation of in Item USD/kg, USD/kg, Remark Oct 200X Jun 200X 1. Total income Price + Return of VAT + Income from selling waste Price FOB Qingdao Oct-2008 Return of VAT No return. Based on quoted price, it belongs to traders Other incomes1 From producing sodium acetate and selling used activated carbon 2. Expense Total production costs + VAT+ EAT & CT Total production costs + House tax+ Land holding tax + Other taxes VAT (Price + Other incomes) 1.17x17% - Materials cost (Raw materials, package materials) 1.17x17% - Steam cost 1.17x17% - Water cost 1.06 x 6% - Electricity cost 1.13x13% EAT & CT VAT x 10 % House tax2 House value x 1.2% Land holding tax3 Land area x Land holding tax Other taxes (Pollutant discharge fee, stamp tax and tax on vehicles and vessels use)4 3. Gross profit Income Expense 4. Income tax5 Gross profit x 33 % in 2006, Gross profit x25% in Net profit Gross profit income tax Note: 1 disclosed that the used activated carbon could be sold and the used acetic acid was used to produce. 2 The estimated house value is about USD million. 3 workshops cover an area of about square meters. 4 Local government annually charges USD for discharging waste. Stamp tax is % of sale revenue. 5 Though some enterprises got tax preferential from the local government, there is no tax preferential for XX, because it is not a new founded enterprise.. 13

15 I-4 Export analysis Export volume and price Table Monthly export volume and price of from Company, X Month Export volume, tonne Average export Export volume, tonne Average export price, USD/kg price, USD/kg Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sept. Oct. Nov. Dec. Total / / Destination Figure Major destination of exported from company, X 12,000 10,000 Unit: tonne 8,000 6,000 4,000 2, A B C D E Others 14

16 Table Major exporters of from Company, X No. Exporter Export volume, tonne Average export price, USD/kg Others Total Table Major Customs of exported from Company, X No. Customs Shanghai 2 Nanjing 3 Tianjin 4 Guangzhou 5 Ningbo Others Total 15

17 I-5 Strategy analysis Sample Strategy Branding has no trademark for its formulations of Product structure At present, the product structure of by output value is as follows: : 8% : 48% : 18% Others: 26% (Others include derivative products and material.) Development of formulations mainly produces the traditional formulations. R&D is shifting its R&D focus to high-profit, high-tech products. - Governmental support Local government gives great support from following aspects: 1) Preferential tax rate:. 2) 16

18 - R&D situation in Table 1: Major achievement of R&D in No. Basic info Application situation Technology Name Scope Whether has patent Patent Year Experts Application Market share by Technology Technology Advantages and patent number validity status technology route level (1,2,3...)

19 Table 2: List of cooperators in R&D with Key players Research Institute of Chemical Industry Research Institute of Chemical Industry Research Institute Co., Ltd. Agrochemical & Chemicals Co., Ltd. Evaluating index General situation 1 2 General situation 1 2 General situation 1 2 General situation 1 2 R&D staff Total amount Amount on technical improvement R&D Structure Achievement amount (patent amount) Achievement industrial amount Literature amount and factor of influence Awards Fund input Note: 1.Technical improvement of R&D includes and. 2. Above players are not the all, it will be added in the final report and team 2 stand for the different R&D team in different R&D centre. 18

20 Table 3: Basic info of cooperators with in R&D Key players Research Institute of Chemical Industry Research Institute of Chemical Industry Research Institute Co., Ltd. Agrochemical & Chemicals Co., Ltd. Evaluating index General General General General situation 1 2 situation 1 2 situation 1 2 situation 1 2 R&D range Potential R&D Employees Experts Expert 3 Location Ownership Website Address Note: Above players are not the all, it will be added in the final report. 19

21 I-6 Competitiveness analysis Sample III-1.5 III Competitiveness analysis of - Production situation Table III Capacity and output of of, 2006~ Comment 30,000t/a 30,000t/a 30,000t/a Mother company only / 25,000t/a 50,000t/a hold shares 90.55% of, and this new project is completed by March ,000t/a 15,000t/a / Stopped since the end of 2007 Total capacity 45,000t/a 70,000t/a 80,000t/a Output / 50,000t 70,000t Recycling of and In the production process of from, large quantities of are generated as the by-products. is the only producer in China that recycles. In this company, is re-used as the raw material for the production of. At the same time, the waste generated during the production process of is re-used in the production of XX. So the recycling of between the production of and is formed. Based on this, this company developed a close-cycle production technology and applied for a patent for this technology. 30,000t/a and 90,000t/a can be recycled for the production line 30,000t/a and 60,000t/a. To produce from, about 900kg is consumed for the production of 1 tonne of. recycles, and then its consumption can be decreased to 100kg. Technology level This company is the first one in China to adopt large DCS automatic equipment. Its yield of is in the leading position in China. In terms of the comprehensive utilization level of wastes and by-products, this company ranks the first among all the producers in China. Early in the end of 1980 s, developed the production process, which was from the process of. 20

22 Raw materials supply Almost total is produced by itself, but is outsourced. It reuses the waste generated during the production process of to produce. Other raw materials are outsourced. Because its capacity is large and most raw materials are self-supplied, its manufacturing cost is relatively low. - Brand This company has two major brands for products: and, both of which enjoy some prestige in the European and North American markets. Its brands are well-known in China: In Sep. 2007, was awarded the title of China Famous Brand Product. In Aug. 2006, s won the title of China Customers Top Satisfied Brand. In 2006, won the Most Competitive Brand awarded by Ministry of Commerce of P.R.C. In 2006, trademark was awarded the title of China Well-known Trademark. - Sales network About 70% of s product is exported. Its products export destinations include: Southeast Asia, Australia, South America, South Africa and Europe. It has a subsidiary in charge of businesses related to products export and raw materials import. - Development plan and strategy Target: Clean & Green chemical production, comprehensive utilization, integration of pesticide//fine chemicals, of multi-industry and multi-region development Measures: Importing international advanced production technology of monomer Developing the business of the derivatives of Promoting the comprehensive utilization level in the industry Developing green pesticide formulations International collaboration - Core Competitiveness The core competitiveness of lies in: - Export channels - Manufacturing cost 21

23 This company has two major brands for products: and, both of which have a good prestige in Europe, North America and other regions. Its manufacturing cost is very competitive mainly because: - its production scale is very large - Its patent technology close cycle technology reduces the production cost of and. - is fully self-supplied, so it has the strong capability of being against the price fluctuation of raw materials. Because of the above-mentioned reasons, the manufacturing cost of in is lower than that in, which also uses to produce. Sample Two SOWT analysis of Company Strength - Leading position in industry: As the largest producer in, captures over 40% market share, earning it a high profit. - Perfect distribution network: The distribution of 's is undertaken through over 39,824 cooperative societies around the country. And the entire activities of distribution, sales and promotion are coordinated by, one of governmental offices in City, assisted by the Marketing offices in the field. - High quality of : mainly produces, belonging to high concentration, especially in which is greatly needed for. - Low other cost: Thanks to large production scale in production including, the other cost of in is really low compared with other producers. - Possession of joint ventures overseas: can get abundant and with relatively low price through building several joint ventures overseas. Weakness - High cost for basic materials: since the raw materials of, especially and, are dependent on import, the cost of basic materials in is very high in. - Setting maximum retail price from government: as government strictly controls the maximum retail price of to protect farmers interest, and the gap between retail price and production cost is paid by subsidy, which would reduce the profit for. Opportunity 22

24 - New policy released: to stimulate the enthusiasm of domestic producers including, released new policy on April 1, 2010, which is expected to bring more profit to producers. - Increasing demand in domestic market: - Export: in the next 5~6 years, export may be an opportunity for producers since government relaxes the limitation on export. Threat - Import from overseas: with the relaxation on import, more will be imported to in the future, which will exert great impact on domestic products, both in production and consumption. Table VI SWOT analysis of Strength - Leading position in industry - Perfect distribution network - High quality of Weakness - High cost for basic materials - Set maximum retail price from government - Low other cost - Own joint ventures in overseas Opportunity SO WO - New policy released - Increasing demand in domestic market - Export - can capture more domestic market to increase its profit through its strength - It is good advice to export - can reduce the cost of basic materials to get more profit through importing raw materials from its overseas joint ventures Threat ST WT - Import from overseas - can adopt differentiation strategy to compete with overseas producers - can improve the quality of to compete with overseas products, both in the production, marketing and after-sale service 23