Financial management based on Bank of Shanghai Co., Ltd Executive Summary

With the rapidly development of economy,the bank enterprise have win the considerable development chance in recently year.After the financial crisis in 2009, it is crucial to bank industry pay attention to finance management.However,there exit a series of problems in bank such as shadow bank appearance ,the high leverage,and the high debt,the financial product over-development.

With the advanced concept and characteristics of bank ,this paper explores the relationship between this company and fiance management.The papers analyse the financial ,the basic information and the detail of the flotation,and the price of share after flotation and provide some suggestions for fiance management.

Keywords：fiance management   S.F. Holding Co., Ltd

Introduction

With the constantly development of science and technology, the economic  have made historic achievements and seen far-reaching change.The enterprise continuously explored to reduce the operating cost , improved operating efficiency . Inadequate financial management ,ineffective financial supervision and the poor financing ability in China capital market ,the high leverage , the overvalued of the P/ E are nothing new in the Chinese banking industry.

Through the net get the basic of company history ,we can get more knowledge of Shanghai Co., Ltd.The author will make a simple analysis toward company flotation.the detail contain about the capital structure,reasons for flotation,and the share after list ,and the future prospect of the company.According to the corresponding analysis, found the company exist financial management problems and put forward the corresponding Methods.Finally,we will get conclusion about the company.

1. Basic of the company

1.1History of the company

The Shanghai Co., Ltd is set up in 1995.The company target at service with shanghai city ,and then to build up a nation bank.In September 1999,the company merger with the international financial corporation of world bank group,and in December 2001,the company also get the investment from Hongkong HSBC and other foreign banks.In 2004, Shanghai bank won the title of Shanghai famous trademark.In November 2005, it decide to set up subsidiary in ningbo city.In 2006,the bank become the first city commercial bank to expatriate manger in china.On October 22, 2007, it set up subsidiary in nanjing city ,and on January 2, 20,the hangzhou branch is set up.By the end of 2010,the firm have 250 outlets and nearly 2000 automatic service terminal equipment.In November 4, 2016, the company  listed in shanghai.

1.2 The reasons and the implication of the flotation

As the end of 2016 ,the company listed .we will see the company total asset of group get to RMB1,755.371 billion,get a increasing about 21.13%.The balance of deposits from customers amounted to RMB849.073 ,which also see a great increase.The total loans and advances to customers amounted to RMB554.0 billion,which have a great chance to get develop .The net fee and commission have also increased by 11.7%. The operating income of the Group increased by 1.75%,and the net interest spread was 1.72%.

The reason why the firm to get IPO can be list as follow:firstly, it can be easy for the company get the money from the market,and let more investors and company pay attention to it.The company can not only to financing,but also to improving the image of the firm;secondly,we should also to find ,in China ,the bond market is not develop very well ,the company can only get money from share .The high-leverage debt make the company do not like to get money from another company.Finally,the financial management goal is to make the shareholders to get fat return,through this way ,they can get more premium for the stocks.

The Implication of flotation can be show as follow:on the one hand ,the company can get more chance to develop in the market,the firm have large asset can decline the risk in the market;for another thing ,the investor can get more information from the company,can help them to make rational decide in market.furthermore,the government can charge with the company by more rules.The market can reflect the promising risk in time ,which can help the firm to manger well.As listed ,the company have to help the stockholders to revenue,so it can supervise the company in another way.

2. Financial Management of Bank of Shanghai Co., Ltd

2.1financial indices of Bank of Shanghai Co., Ltd

(1) Liquidity ratios

From the information given in the table,Will the company face trouble in the coming year to pay the obligation?Does it mean the company is get well operation in the company cash management?

The current Ration Equation

The Acid test

As I Search the other company in the banking industry ,we may found that the firm is not high  than other company.The acid test is used to measure the firm ability to converted asset to cash in the market apace.The inventories in the market is the least liquidity current asset.Compare with other listed logistics companies,the bank of shangahi Co., Ltd is low in its industry.

(2) Asset management ratio

Asset management ratio is widely used in modern firm to measure a company how effectively run it asset.If a firm put majority money in the capital investments ,or if the firm have buy most fixed assets ,then the cash flow of the company is low,and the shareholder interest is hurt.Of course ,base on the hypothesis of ration ,the stockholder will sale it stocks in the second market .On the another hand ,if the company is a rising company,do not have enough resource and methods to expand it asset,the market will lose it confidence in company.

(3) Debt management ratio

According to the Modigliani–Miller theorem,if we move to a world where there are taxes, when the interest on debt is tax deductible, and ignoring other frictions, the value of the company increases in proportion to the amount of debt used. In China capital market ,the build-up scale of  corporate debts ,comparatively single of the financial channel , the low proportion of financing has long affect China capital market.

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The debt-to-equity is equal to dividing debt by equity

From the data get in the above ,the firm like to get debt to raise money.And the debt -to-equity is high above the line of industry.However,every coin have two side,the firm may face great default risk and have a chance in bankruptcy .According to the trade-off theory ,the company should to keep a best balance between the debt financial and equity financial to get the fat return.

(4) Profit ability ratio

 The net profit margin is a measure of firm can get how much from sale products and service.The net profit margin is influence by the rational management ,also affect by other factors in the industry.The fiercely competing make the company net profit margin is low.

The net profit margin is calculated by dividing the net income by sales:

By compare with other logistics companies ,the firm is far less than the industry line.The reason is not only concern with the firm operation ,but more related to the dull industry future.

(5) The ratio of net income to total asset can be defined as follow:

The ratio of net income to total equity can be defined as follow；

Contrast with another company,  ROE and ROA is low than average .The reason can be listed as follow:on the one hand ,the company asset is far more huge than other logistics companies,the high debt as we discuss above,which contribute the firm has to pay high interest ;on the another hand ,it imply the company have low basic earning power.

(6) Market value ratio is usually related to a company stock prices to its earning 、cash flow and so on.A s a listed company ,the market value is used widespread by another company and  investor.A Perfectly market value ratio can add more value to the company in future.The P/E show the investors like to pay how much for profit.

The P/E ratio can be defined as follow:

The Net asset per share can be listed as follow：

The chinese stock market is overvalued,which is also same in the logistics enterprises.The velocity of increase in is far behind than the other company in industry.Furthermore,due to the measures like stepping up discounts toward e-commerce customers,and efforts to expand infrastructure construction,the firm net earning speed had dropped.

2.2Performance and future of the company

From the information give in the annual report of 2016,we may found the company have get the net profit 14,325,064,the company total asset is 1,755,371,102.Compare with three years ago,the firm have rise increasing.The increase was mainly due to the increase in investment and loans and advances to customers.We will find the company Capital Adequacy Ratio have rise from 12.57% to 13.17%。After the firm get in listed,it net profit have declined from 19.85 to 16.27.The return on average assets have declined from 0.89 to0.86;and the capital adequacy ratio have increase to 1%,the return on weighted average net assets have declined from 14.85% 12.63 to 12.63%

The firm rank in the earth have rocketing climb up to 91st  as compared with the previous year.Net assets per share attributable to shareholders of bank have get increase to RMB19.28.In the 2017 annual report ,we find the company net asset per share to shareholder have become to16.85.The foundation of reason lie in the compete in the banking industry is becoming more and more difficulty.The authority of banking have become more serious with the system risk in financial.The new basel three accord make more serious require of capital adequacy ratio.The tradition of banking make profit by interest-rate spread between deposit and loan is fade .The firm must to make financial product to get the attention from another customers.Furthermore ,we should neglect the the service is very important in today banking industry.

From the information get from 2012 to2016,the total asset of the company have get more than RMB1.7trillion.Secondly,the bank have get invest in the high-tech industry such as science、technology、innovation enterprise ,which may get more profit for company.Also,the company have get the require to do the consumer financial service.China consumers have a big market for the company.With the firm also investment oversea,the company will get more and more successful in the future.The company get support with major infrastructure construction to enhance it profit .

3. Summary

From the analyse of financial indices of bank,we can get a base know of company,such as the history of company,and the detail of company after flotation.

Something urgent we should to deal with . Moreover,the profit margin of company have dropped in years.Finally ,the debt ratio of company is rising year by year.There are some suggestions for the company to do as follow:First,The company should follows the prudent principle ,keep the relative stability of policy methods,set up dynamic supervising mechanism in internal; secondly,.The company should to improve the service to customers,make the customer to fell well with the bank.Finally,the risk in the banking market is more serious,the firm should to invest more health product,of course,it can make innovation in bank product.

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