7 Abstract Abstract Film capacitor products, as one type of the basic electronic components, have large and wide market potential. However, the domestic manufacturers usually have to survive the fierce competition from both domestic and international competition, as the domestic market is competitive and relatively open without any policy protection. The paper provides a research towards the two benchmarking enterprises in the industry, Fara Electronic and Tongfeng Electronic, in order to evaluate financial situation and investment value of A-share listed companies in the industry, and to seek the consistence between the stock value and its intrinsic value. The purpose of the paper is to provide suggestions for the managers and investors upon the comparative analysis of the financial situation and the evaluation of the investment value between the two companies. The paper is divided into ten chapters, consists of several modules towards different levels including the macroeconomic environment, industry and the companies, according to a top-down methodology. Chapter 1 provides an overview of the research, including the background, significance, methodology and framework of the paper. Chapter 2 provides analysis of the macroeconomic environment, including its current situation and tendency. Chapter 3 provides analysis of the industry, describing the current situation and tendency of the film capacitor industry. Chapter 4 provides the introduction of the two companies. Chapter 5 provides analysis of the financial index system, including profitability, asset efficiency, cash creation ability and capital market performance. Chapter 6 provides threedimensional analysis of financial statements, including the structure and tendency of their financial statements. Chapter 7 provides decomposition analysis of the key index, including ROE, risk index, self-sustainable growth ability, EVA and cash ratio. Chapter 8 provides analysis of the financial policy and financial strategy matrix, including dividend policy, debt policy, working capital management policy, investment policy and financial strategy matrix. Chapter 9 provides evaluation of the investment value, upon which an investment advice will be briefed. The evaluation process consists of predict of the two companies' profitability, application of DCF, EBO, EVA, P-E, P-B, P-S and PCF to weigh the companies value, and sensitivity analysis of the valuation results. Chapter 10 summarizes the conclusion, suggestion and inspiration of the paper. The following conclusions are made upon the analysis of the paper. Fara Electronic is III
8 A Study on Financial Analysis and Valuation of Fara Electronic and Tongfeng Electronic better than Tongfeng Electronic in the aspect of financial situation due to the comparative financial analysis. The theoretical value of Fara Electronic is higher than Tongfeng Electronics due to the valuation analysis. The stock price of Fara is undervalued and therefore advised to purchase, however, the stock price of Tongfeng is overvalued therefore advised to sell. It is suggested that the managers of Fara Electronic should keep strengthening and expanding the market of new energy, and seek diversified development. It is suggested that managers of Tongfeng Electronic should keep intensifying its development in the market of new energy, and complete the internal control. Furthermore, seven pieces of inspirations are concluded for more study of the industry. Key words:fara and Tongfeng;financial analysis;valuation IV
11 Contents Contents Chapter 1 General Information 1 Section 1 Research Background and Significance 1 Section 2 Thinking of Research and Analysis Framework 1 Chapter 2 Macroeconomic Analysis 4 Section 1 Analysis of Macreconomic Situation 4 Section 2 Forecast and Expectation of Macroeconomic 13 Chapter 3 Industry Analysis 15 Section 1 Development History and Status of Film Capacitor Industry 15 Section 2 Future Trends of Film Capacitor Industry 19 Section 3 Industry Risk Assessment 21 Section 4 The Sum 21 Chapter 4 Company Fundamental 22 Section 1 Fundamental of Fara 22 Section 2 Fundamental of Tongfeng 27 Chapter 5 Comparative Analysis of Financial Index System 32 Section 1 Financial Index System Construction 32 Section 2 Financial Index System Analysis 33 Chapter 6 Three-dimensional Analysis of Financial Statements 63 Section 1 Structural Analysis 63 Section 2 Trend Analysis 67 Chapter 7 Decomposition Analysis of Key Financial Indicators 73 Section 1 Decomposition Analysis of ROE 73 Section 2 Decomposition Analysis of Risk 75 Section 3 Comparative Analysis of Self-sustainable Growth Rate 79 Section 4 Comparative Analysis of EVA 80 Section 5 Decomposition Analysis of Cash Rate 85 Chapter 8 Financial Policy Evaluation and Financial Strategy Matrix Analysis 89 VII
12 A Study on Financial Analysis and Valuation of Fara Electronic and Tongfeng Electronic Section 1 Financial Policy Evaluation 89 Section 2 Financial Strategy Matrix Analysis 92 Chapter 9 Valuation of Investments 94 Section 1 Valuation Methodologies 94 Section 2 Financial Forecast 95 Section 3 Earnings Pricing Valuation 104 Section 4 Relative Pricing Valuation 109 Section 5 Sensitivity Analysis of The Results of The Valuation 114 Section 6 Investment Advice and Risk Warning 115 Chapter 10 The Enlightenment and The Insufficiency 118 Section 1 The Conclusion 118 Section 2 The Suggestion 129 Section 3 The Enlightenment 121 Section 4 The Lack of Research 122 THE Appendix 123 The Reference 125 The Ackonledgement 126 VIII
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