financial management- company analysis
TRANSCRIPT
-
8/8/2019 Financial Management- Company Analysis
1/21
-
8/8/2019 Financial Management- Company Analysis
2/21
Japan Airlines Corp Company OverviewProvide air transport services
Japan Airlines Corp.
Air transportation -
operation of passengers andcargo planes
Travel planning and
sales - planning andsale of travelpackages
Air transportation-related
Catering, development of equipment
etc
Card and leasing -
provision of financial, card andleasing services
Others - businessesrelated to
hotels, resorts, logistics, wholesale, retail, r
eal estate
-
8/8/2019 Financial Management- Company Analysis
3/21
Overviewy Common Primary Shares (mil) 546 y Market Cap Consolidated (mil) 320 .23 y
Enterprise Value (mil) 1,0 65,598 .23 y EPS -2 5.47 y PE Ratio -7.85 y Last Dividend 0 .15 y Dividend Date 7/ 11/ 200 5 y Dividend Yield n/ ay Beta 0 .12y 5 year growth rate -30 9.97%
-
8/8/2019 Financial Management- Company Analysis
4/21
JAL s story of Bank rup tc y .y D ebt-saddled Japan Airlines (JAL), Asia's
biggest air carrier by revenue, filed forban ruptcy on 19 th Jan 20 10 to seeprotection from creditors.
y Over 15000 employees lost their jobs.y JAL is now valued at $ 150 m USD the price of 1 new jumbo
jet...y By March 20 13 , the carrier is expected to cut 15,000 jobs -
one-third of its wor force - and shut down 53 of its 110 companies. It will also cut unprofitable routes and replaceageing planes to eep afloat and be able to post a profit of 115.7 billion yen ($ 1.2 7 billion) in the fiscal year ending inMarch 20 12 .
-
8/8/2019 Financial Management- Company Analysis
5/21
Wh at we nt wr ong??y Founded in 1951, Japan's f lagship carrier came to
symbolise the country's rapid economicgrowth, leading to privatisation in 1987
y It also found itself with growing pension and payrollcosts, and running many unprofitable domesticroutes, which it was politically obliged to maintain
y More recently, it has seen falling passenger numbers inthe global downturn, and as a result of increasedcompetition from Japanese rival All Nippon Airways
y It lost 13 1bn yen ($ 1.4bn; 88 0 m) in the six months toSeptember
-
8/8/2019 Financial Management- Company Analysis
6/21
Japan A irline s Financ ia ls
-100000
-50000
0
50000
200 1 2002 2003 200 4 200 5
Net Income
N et I c e
-
8/8/2019 Financial Management- Company Analysis
7/21
Financ ia l Summ a ry of last 5 yrs
03/31/09 03/31/08 03/31/07 03/31/06 03/31/05 03/31/04
Sales 1,951,158.00 2 ,230 ,416.00 2 ,30 1,915.00 2 ,199 ,3 85.00 2 ,12 9,876 .00 1,93 1,742 .00
Operating Income After D epreciation -50 ,884 .00 90 ,0
13 .00 22 ,917.00 -2 6,83 4.00 56 ,149 .00 -67,645 .00
NetIncome - 63 ,194 .00 16,92 1.00 -16,2 67.00 -47,2 43 .00 30 ,0 96 .00 -88 ,619.00
Net Cash F lowF rom Operating Activities
3 1,755.00 157,33 1.00 12 7,748 .00 100 ,984 .00 145,2 75.00 76 ,345.00
Net Cash F lowF rom Investing Activities
10 5,653 .00 2 6,22 9.00 56,2 16.00 99 ,2 83 .00 2 1,456 .00 85,3 82 .00
Net Cash F lowF rom F inancing Activities
-116,767.00 3 6,896 .00 -53 ,00 7.00 -91,3 84 .00 -6,2 90 .00 7,615.00
TotalAssets 1,744 ,649 .00 2 ,117,191.00 2 ,0 83 ,48 2 .00 2 ,10 9,155.00 2 ,118,0 59.00 2 ,0 63 ,773 .00
Total
ia
ilities 1,547,878 .00 1,646 ,12 1.00 1,751,60 9.00 1,933 ,64 0 .00 1,897 ,539.00 1,88 0 ,361.00
-
8/8/2019 Financial Management- Company Analysis
8/21
All Nippon Airways Company OverviewProvide air transport services
All Nippon Corp.
Air transportation
- operation of passengers andcargo planes
Travel planningand sales -planning and sale
of travel packages
Airtransportation-rel
ated Catering, development of
equipment etc
Maintenance of
aircrafts in thecountry andoverseas markets
Others - businessesrelated to
hotels, resorts, logistics, wholesale, retail,
real estate
-
8/8/2019 Financial Management- Company Analysis
9/21
Overviewy Common Primary Shares (mil) 2 50 6 y Market Cap Consolidated (mil) 752 437.1 y PE Ratio 141.3 6y Dividend Yield 0 .3 4y Beta 0 .33y Enterprise Value : 1,500 ,30 6y 1Yr Sales Growth : -6.40
-
8/8/2019 Financial Management- Company Analysis
10/21
All Nipp on F inanc ia ls
0 .00
200 ,000 .00
400 ,000 .00
600 ,000 .00
800 ,000 .00
1,000 ,000 .00
1,200 ,000 .00
1,400 ,000 .00
1,600 ,000 .00
Mar' 0 6 Mar'0 7 Mar' 0 8 Mar'0 9 Mar'10
Net Income
-
8/8/2019 Financial Management- Company Analysis
11/21
-
8/8/2019 Financial Management- Company Analysis
12/21
P rof itab ility rat ios co mp a rison
3 .0 93 .76
6.10
0 .86
-2 .96
-1.72
0 .20
2 .11
-3 .81
2006 2007 2008 2009 2010
Return On Invested Capital All Nippon Japan Airlines
2 .302 .78
4.40
0 .62
-2 .30
-1.20
0 .13
1.3 8
-2 .36
2006 2007 2008 2009 2010
Return on Assets All Nippon Japan Airlines
-
8/8/2019 Financial Management- Company Analysis
13/21
P rof itab ility rat ios
69 .65 69 .71 66 .4673 .58 77.2 878.49 77.48 75.33 8
1.42
2006 2007 2008 2009 2010
Cost of Goods Sold To Sales All Nippon Japan Airlines
1.95 2 .19
4.3 1
-0 .3 1
-4.67
-2 .15
-0 .71
0 .76
-3 .2 4
2006 2007 2008 2009 2010
Net Margin All Nippon Japan
58.62 49 .2 5 43 .44 46 .36
2 44 .38
188 .20169 .52
2 78.75
198 .86
2006 2007 2008 2009 2010
Total Debt Pct Total Assets
Japan Airline All Nippon
-
8/8/2019 Financial Management- Company Analysis
14/21
Lever ag e rat ios
2006 2007 2008 2009 2010
Total Debt Pct CommonEq uity
All Nippon Japan Airlines
32 .95
39.91 41.55
30 .49
38.13
11.73
2 6.532 4.44
2 .57
2006 2007 2008 2009 2010
Eq uity Pct Total Capital All Nippon Japan Airlines
58.62 49 .2 5 43 .44 46 .3 6
2 44 .3 8188 .20 169 .52
2 78 .75
198 .86
2006 2007 2008 2009 2010
Total Debt Pct Total Assets
Japan Airline All Nippon
-
8/8/2019 Financial Management- Company Analysis
15/21
Liquidi ty Rat ios co mp a rison
0 .77
0 .63
0 .55
0 .46
0 .610 .640 .71
0 .91
0 .53
2006 2007 2008 2009 2010
Q uick Ratio All Nippon Japan Airlines
1.10
0 .89 0 .87 0 .89 0 .89
1.0 7 1.0 7
1.23
0 .75
2006 2007 2008 2009 2010
Current Ratio All Nippon Japan Airline
-
8/8/2019 Financial Management- Company Analysis
16/21
Comp a rison b e twee n ANA an d JALy Japan Airlines (JAL) and All Nippon Airways
(ANA), illustrate crucial differences in theirfinancial condition and could signal change in the
nation s aviation hierarchy.y Both carriers rang up deficits, with ANA recording aclose to 30 billion yen (US$ 3 14.5 million) net loss and JAL with a staggering net loss of 99 billion yen (US$ 1.0 4 billion).
y In June, JAL sought and obtained 100 billion yen in a rescuepac age from a group of five Japanese lenders led by the JapanD evelopment Ban , 80 % government guaranteed, to coverhemorrhaging losses.
y a ing a self-styled standing on its own two feet approach, ANA wentto the mar et in July and raised 141.7 billion yen in a new shareissue, about 20 % less than intended, as the shares price fell after theplan was announced, but within their target.
-
8/8/2019 Financial Management- Company Analysis
17/21
Comp a rison b e twee n ANA an d JAL
cont ..y ANA is procuring funds for capital investment in a growth strategy, JAL
is funding losses from its structural inefficienciesy Of the two airlines, ANA is in a much stronger position
financially, despite having madea loss last year of 4.3 billion yen, its first loss in six years.
y ANA has a strong balance sheet, with plenty of cash reserves andmar etable assets. On the other hand, JAL s balance sheet is not insuch good order, having made losses in four of the past six years
y ANA s better financial shape is attributable to the airline s careful andtimely restructuring. In the past seven years it has renewed andsimplified its fleet, fine-tuned its networ and has generally beenquic er to react to mar et changes than the less nimble JAL.
y Far-sighted ANA joined Star Alliance in October 1999 and hasbenefited tremendously from the synergies created with alliancepartners.
-
8/8/2019 Financial Management- Company Analysis
18/21
Z- sco re va lue sy T he original Z-score formula is as follows : Z = 1.2 T 1 + 1.4T 2 + 3 .3 T 3 + .6T 4 + .999 T 5. where,
T 1 = Wor ing Capital / Total Assets. Measures liquid assets in relation to the size of thecompany.
T2
= Retained Earnings / Total Assets. Measures profitability that reflects the company's ageand earning power.
T3 = Earnings Before Interest and Taxes / Total Assets. Measures operating efficiency apart
from tax and leveraging factors. It recognizes operating earnings as being important tolong-term viability.
T 4 = Mar et Value of Equity / Boo Value of Total Liabilities. Adds mar et dimension thatcan show up security price fluctuation as a possible red f lag.
T 5 = Sales/ Total Assets. Standard measure for sales turnover (varies greatly from industry to
industry).Based on the above formulae , the calculated Z-score values are as follows,
All Nippon : 3 .2 Japan Airlines : 1.1
-
8/8/2019 Financial Management- Company Analysis
19/21
-
8/8/2019 Financial Management- Company Analysis
20/21
Se ct ion 2, G roup 14
y Aadarsh ( FT11 2 48 )y Namit ( FT11 23 8)y Nidhi Garg ( FT11 2 40 )y Shalini ( FT11 2 62 )y Victor( FT11 2 72 )
-
8/8/2019 Financial Management- Company Analysis
21/21