baibing GU2.docx
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baibingGU2
Stage1Planning
1.SMARTobjectivesoftheproject
IndustrialandCommercialBankofChinaisabbreviatedICBCwasfoundin1984,themainbusinessdirectionisincludingcreditandsavings.
InordertohelpthepotentialinvestorstoevaluatecurrentandfutureinvestmentvalueofICBC,thisreportwillusefinancialratioanalysisandtrendanalysisastwotoolstoanalyzethefinancialperformanceinthehistoryofICBConthreeaspectswhichincludebank’sprofitability,liquidityandsafety.Andintheend,therecommendationwillbegiventothepotentialinvestorstomakeabetterdecision.TheinvestigationofthisreportwillbespentthirteenweeksandtheobjectivewillbeexpectedcompletedbeforetheDecember31st.
2.Statementoftheissuestobeinvestigated
Asthelargeststate-ownedcommercialbank,theICBChasbeenalreadyturningtothefocusamongthenumbersofinvestorsintheChinaStockMarket.ThisreportusestheknowledgeofinvestmenttoidentifywhetherornottheICBChasagoodinvestmentvalue.Andthroughthedataanalysisinthefinancialstatements,theprospectsofICBCwillbeevaluatedatthesametime.
ThisreportwillusefinancialratioanalysisandtrendanalysisastwotoolstoanalyzethefinancialperformanceinthehistoryofICBConthreeaspectswhichincludebank’sprofitability,liquidityandsafety,tohelpthepotentialinvestorstoevaluatecurrentandfutureinvestmentvalueofICBCandmakeabetterdecision.
ThemainanalysistoolsoftheinvestmentvaluewhichwillbeusedincludeNetProfitandNetProfitMarginanalysisandtheReturnonEquityRatio,Loan-to-DepositRatio,CashFlowRatio,CapitalAdequacyRatioandNon-PerformanceLoanRatioanalysis.AndfinancialindicatorshaveadecisiveroleontheinvestmentvalueanalysisanditwillgiveapictureofinvestmentofICBCtothepotentialinvestors.
3.ReasonswhyIchoosethisissueandhowtocorrespondsubjectcovered
Themainreasonsforchoosingthisissueasfollow:
●Inthissocietywhichtheinformationisdevelopingrapidly,knowingacertainnumbersoffinancialinformationaboutinvestmentvalueismostbeneficialforinvestors.Inaddition,theinvestmentvalueofbanksindustryasahottopicattractsthenumbersofpeopletofocus.
●TheratioandtrendanalysisasanimportantroleinthefinancialtoolsusedtoanalyzetheinvestmentvalueofICBC,andthisinformationiseasilytofindintheannualfinancialstatements.
●Analysisthefinancialcriteriaofinvestmentvaluecanreflectthecompany'spastandevaluatefutureperformanceinacertainextent.Sothisissueisworthtodiscuss.
ThefinancialstatementsanalysisinthisreportwhichwillbeusedcanbefoundinBusinessAccounting:
Advanced,whichcodeisDE3934.
4.ReasonswhyIchooseIndustrialandCommercialBankofChina
Withthefinancialmarketsdevelopment,moreandmorecompaniesareimprovedgradually.Then,therearealotoffundswillflowintotheinvestmentmarket.Atthesametime,thebanksarebecamethefocusofthemajorityofinvestors’objectives.Themainreasonforchoosingthiscompanyasfollow:
●Afterseveralyearsofdevelopment,IndustrialandCommercialBankofChinaastheoneofthestates-ownedbankswassuccessfullylistedin2006.Andbecausethegradualexpanddistributionschannelsandthehighlightedcorestrengths,itbecamethefirstlistedbankandthemostprofitablebankoftheworldin2008.
●Withsupportofthegovernment,ICBCwhichhasahugeorganizationsystemandadvancedinformationtechnologyhasbeenbecamethelargestcommercialbank.Asthelargeststate-ownedcommercialbank,ithaslargecompetitionadvantageswhichleadtothemarketshareofICBChasastablerising.TheinvestmentvalueoftheICBCinStockMarketisalsoattractedthenumbersofinvestorstofocusintheChinaStockMarketfield.
●DuetomymotherisamanageroftheICBC,Icangetmuchprimaryinformationeasilytoenabletheinvestigationismoreaccurately.AndbecausetheICBCisthemostfamiliarbankforme,Iwanttoknowmorefinancialinformationaboutit.Therefore,theinvestmentprospectsofICBChaveagoodvaluetoanalyze.
5.ThesourcesofinformationandreasonswhyIchoosethetypeofcollection
Inthisreport,bothsecondaryandprimarydatawillbeusedto…..
Secondarydataisthathasalreadybeencollectedbysomeoneelseforadifferentpurposetoyoursissecondarydata.Thesecondaryinformationisincludingtheinformationfromthelibrary,newspaper,magazineandInternet.Astheexternaluserforfinancialinformation,theannualreportoftheICBCwillbeusedtosupport.SointhisreporttheinformationfromtheInternetandlibraryareusedfrequently.
Theadvantageofthesecondaryinformation:
●Theinformationiscollectedquicklyandcheaplywhenthetimelimited.
●Muchinformationwhichneedstouseiseasytoaccessinthecollection.
Primarydataisthatwhenthedatacollectoristheoneusingtheinformationforanalysis,thesourceisprimary.Theprimarydataisincludingquantitativedata,qualitativedata.Andonlythequantitativedataisusedinthisreport.
Theadvantageoftheprimaryresearch:
●Theinformationisup-to-date,specificandaccuratewhenthefinancialdataanalysis.
●Itisthetailor-madetosuitthefinancialinvestmentresearch.
6.Themethodstocollecttheinformationandthereasontochoice
Themainsecondaryresearchinthisreportisincludinginternetandlibrary.
a.Internet
Fromtheinternet,thenumbersofannualfinancialreportsandthediscussionsabouttheICBCareeasytofind.
TheadvantageoftheInternet:
●Itcanhelpmeknowtheupdateinformationaboutthefinancialanalysis.
●ItallowsmetocollectenoughinformationforICBCinashorttime,andatthesametimethecostsarelimited.
b.Library
Fromthebook,professionaljournals,magazines,andnewspapersinthelibrary,IcanfindthematerialssuchashistoryandenvironmentchangesabouttheICBCandthedatawhichcomparedwiththeotherbanksinformationatthesametime.
Theadvantageforlibrary:
●Itcanprovidelargenumbersofinformationquicklyandcheaply.
●Thedatabaseoftheschoollibraryisverypowerfulanditcanhelpmetocollectinformationfromthebook,professionaljournals,magazines,andnewspapersatthesametime.
ThemainprimaryresearchinthisreportisincludingFace-to-Faceinterview.
ThroughdiscusswiththeMr.ZhangwhoisthemanageroftheICBCinvestmentdepartment,IknowmanyinformationaboutcurrentinternalchangesoftheICBCandthekeypointswhichcaninfluencetheinvestmentvalueofICBC.
TheadvantageofFace-to-Faceinterview:
●Itisfeasibleformetocarryoutandacquirealotoflatestinformationwhichcannotbecollectedfromtheinternetorlibrary.
●Themostsuitablemethodinquantitativeresearch,thiskindofinformationistrustworthyandrelevanttotheinternalinformationoftheICBCaccurately.
7.Criteriausedtoassesstheimplicationsoftheissue
Inordertopresenttheprofitability,liquidityandsafetyoftheICBCbetter,thetrendanalysisandratioanalysisastwotoolswillbeusedtoanalyzethedifferenttype’sdataoffinancialstatementsandcomparewiththedatafrom2004to2008.Then,throughthethreeabilityanalysistoidentifywhetherornottheICBChasaninvestmentvalueasfollow.
Conventionally,thebankingindustryusesxxx,xxxandxxxtoevaluatetheinvestmentworthinessofacommercialbank,thereforeinthisreport……
●Profitability
Itreferstotheabilityhowtocreateprofits,alsoknownasenterprisefundsorcapitalvalue-added.Inthebank’sindustry,profitabilityasonecriteriatodecidewhetherornotthebankhasaninvestmentvalue.Accordingtothebank’sindustrystandard,thehighprofitabilityindicatesthebankhashighshareholder’sreturnandgoodcompetitionadvantagethenithasagoodinvestmentvalue.Butthelowprofitabilityindicatesthebankdoesnothaveinvestmentvalue.
ThisreportwillbeusethetrendanalysistooltoanalyzethetrendchangesofNetProfitandNetProfitMarginandusetheratioanalysistooltoanalyzetherangevariationofReturnonEquityforICBCtoidentifytheprofitabilityoftheICBCtodecidetheinvestmentvalue.
●Liquidity
LiquidityisanabilityofICBCpresentforassetsturnintothecash.Inthebank’sindustry,liquidityasonecriteriatodecidewhetherornotthebankhasaninvestmentvalue.Accordingtothebank’sindustrystandard,thehighliquidityindicatesthebankhashighassetutilizationabilityandenoughmoneytofacetotheproblemofcashflowthenithasagoodinvestmentvalue.Thelowliquidityindicatesthebankdoesnothaveinvestmentvalue.
ThisreportwillbeusetheratioanalysistooltoanalyzetherangevariationofLoan-to-DepositRatioandCashFlowRatioforICBCtoidentifytheliquidityoftheICBCtodecidetheinvestmentvalue.
●safety
SafetyreferstoabilityofmeasurewhetherornottheICBChasabasicassetsriskandgoodwill.Inthebank’sindustry,safetyasonecriteriatodecidewhetherornotthebankhasaninvestmentvalue.Accordingtothebank’sindustrystandard,thehighsafetyindicatesthebankhaslowassetsriskandperfectgoodwillthenithasagoodinvestmentvalue.Thelowsafetyindicatesthebankdoesnothaveinvestmentvalueevenbankruptcy.
ThisreportwillbeusetheratioanalysistooltoanalyzetherangevariationofCapitalAdequacyRatioandNon-PerformanceLoanRatioforICBCtoidentifythesafetyoftheICBCtodecidetheinvestmentvalue.
8.Thetimescalesforconductingtheinvestigation
SourceofInformation
MethodsAdopted
ActivitiesandInformationCollected
Duration
Costs
Secondary
Information
In