CC6105 - The Dynamics of Investment in Greater China

Case Analysis Presentation

Fujian Industrial Securities Company

alvin

boon kok

charles

lynnice

puay leng

theng hwee

presents

FIS

problems

solutions

features

strategies

FIS

problems

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strategies

1

Size
limited size and lack of powerful ties limitation in the volume of business competition with national securities houses in Shanghai lack of local favoritism

FIS

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24
Shanghai : 3 Fuzhou : 4

FIS

problems

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Offices

24

113

Clients’ Transaction Settlement Fund (2006)

RMB 5 Billion
Ranking : 18/20

RMB 26 Billion
Ranking: 3/20

FIS

problems

solutions

features

strategies

targeted at niche areas

Proprietary Trading

Priority Services for the riches

FIS

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Proprietary Trading: the most profitable activity

Income from Proprietary trading Operating Income

= 21.5%

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solutions

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Net Profit (2006)

RMB 0.3 Billion

RMB 1.5 Billion

Income from Proprietary trading
(2006)

RMB 0.2 Billion

RMB 0.74 Billion

FIS

problems

solutions

features

strategies

ROE*
(2006)

48.62%
Ranking : 9/20

39.93%
Ranking : 17 /20

* Return on Equity (ROE)
firm's efficiency at generating profits from every dollar of net assets (assets minus liabilities) shows how well a company uses investment dollars to generate earnings growth

FIS

problems

solutions

features

strategies

Big client & Mid client rooms : special trading rooms for wealthy customers

FIS

problems

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2

Industry
unlike other developing countries, China’s aim at raising capital had accelerated the competition extremely competitive environment though market is young, M&A, financial restructuring and consulting services already popular

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Professional Advices Transaction Platform Conferences and seminars Analyst Reports Stock Tips Investment education prog ...

投资 者风险 教育 案例汇 编
【案例 十六 】抵押 房产 炒股 ,小心 露宿 街头 【案情】杭州市民陈先生看到今年资本市场这么红火,同事同学买股票买基金都赚得盆满钵满,他禁不住 心里痒痒,便想到了贷款炒股。他的如意算盘打得很好,在股市里,一年收益按保守估计 15% 算,除去 6.12% 的贷款利率,还有近 9% 的收益。如果点子准,收益还可能翻番。陈先生将两年前通过按揭总价 80 万元买了城 西的一套三居室住房,现市场评估价已值 110 万元,根据银行的加按揭业务,这多出来的 30 万元,可以申请最 高 7 成的消费贷款。因此陈先生便在按揭银行申请了加按揭业务,贷了 6 成的消费贷款 18 万元。但是,让陈先 生想不到的是,他出师不利,刚涉足股市就不太顺利。 18 万资金转眼就亏了 30% 左右,现在面对每月的高额 的银行贷款本息,陈先生感到力不从心,每日紧张地关注股市涨涨跌跌也让陈先生心力憔悴,炒股并没有象他事 先感觉那样轻松。 【点评】抵押贷款的风险同样存在。在相对成熟的资本市场,投资者一般都根据自己的财力决定投资金额 ,以赌的心态去博弈的人不多。但是,在我国当下股市行情火爆的时候,一些人将自己的房产抵押贷款入市,这 种做法首先就为政策所不允许。银监会日前发布的《关于进一步防范银行业金融机构与证券公司业务往来相关风 险的通知》,禁止信贷资金被挪用入市。由于这类投资者往往带着豪赌的心态入市,抗风险能力弱,一旦遇到行 情调整,哪怕短暂的调整都可能给其带来亏损。最高人民法院通过了《最高人民法院关于执行设定抵押房屋的规 定》,第一条就规定:“对于被执行人所有的已经依法设定抵押的房屋,人民法院可以查封,并可以根据抵押权 人的申请,依法拍卖、变卖或者抵债。”这就意味着,抵押贷款者的房产即使是“生活所必需的居住房屋”,也 不再享有任何“特权”,很可能因失去房产使生活受到影响。

FIS

problems

solutions

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3

Ties
lacked good relationship with government and enterprises in other provinces besides Fuzhou Guan Xi with local government : Approval of IPO listing missed many business opportunities as an outsider

FIS

problems

solutions

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strategies

Hiring people from different regions Open more branches Search for new business

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4

People Management
Shortage of talented and qualified employees

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Performance based Bonus + Salary Adjustment

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RMB 800 SOE Worker RMB 2000 Graduate RMB 2000 + Bonus R&D RMB 8000 Investment Banker

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“ 金牛”计划

: 为公司转型发展建立新军。 2003 年、 2004 年、 2005 年、 2007 年 4 年招聘近 400 名大学毕业生,进入 公司进行集中培训后,投入到营业部一线岗位,经过几年的锻炼成长, 大部分金牛学员已经成为营业部的业务杠杆,一部分学员甚至已经成为 营业部内部部门或团队的负责人,带领团队在一线从事客户服务和营销 工作

FIS

problems

solutions

features

strategies

FIS

problems

solutions

features

strategies

1

proprietary trading
Inherent risks Professional knowledge and experience is required

FIS

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features

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2

moral hazard
Investment bankers can work with R&D analysts Research report maybe biased to suit the speculative trading by proprietary unit

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3

investment banking
Huge Potential Expansion strategy in place

Securities underwriting
debt & equity capital market

Corporate advisory

Risky Business

FIS

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4

quality service
strong emphasis on analyst report to meet clients’ needs comfortable environment for customers comparative advantage of R&D analysis on medical, railway, food & beverage, construction, fujian enterprises

FIS

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Thank You

Q&A session