An Analysis of the Financial Situation of F. Motor Co., Ltd.

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INTRODUCTION

TOPIC CHOSEN

The 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 investor’s 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 TOPIC

The 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, FMC’s 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 REPORT

This 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 FMC’s profitability and ability to compete, show its potential for sustained development. 4.To use a SWOT analysis to analyze FMC’s strengths, weakness, opportunities and threats so as to find ways to optimise its performance. 5.To show FMC’s returns and risks so that investors can make the well-informed investing decisions in the stock market. INTRODUCTION

TOPIC CHOSEN

The 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 investor’s 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...
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