How to Face the Opportunity after Instrumentation Enterprises Enter the Market

Correctly choose the financing method to promote the development of the enterprise

Financing is further divided into internal financing and external financing: Internal financing relies on the cash flow generated by the company to meet the new capital needs of the company's production and operation and investment activities. The internal financing is based on the retained profit after tax of the company and the funds formed by depreciation of fixed assets.

External financing refers to obtaining funds from outside the enterprise, including direct financing and indirect financing. Direct financing refers to an enterprise that does not pass financial institutions such as banks, but rather uses a securities market to issue funds, such as stocks, corporate bonds, and trust products directly to investors. Indirect financing refers to a type of financing that companies use to obtain funds through financial institutions such as banks. Therefore, bank loans have become an important way for companies to indirectly finance.

Factors Affecting the Choice of Corporate Financing Options

Internal factors include the company's development prospects, profitability, operating and financial status, industry competitiveness, capital structure, control rights, business size, reputation and other factors. Under the role of the market mechanism, these internal factors are constantly changing, and corporate financing methods should also be flexibly adjusted along with the changes in these internal factors to adapt to changes in the financing needs of enterprises in different periods.

External factors refer to various external objective environments that affect the choice of corporate financing methods. Mainly refers to the legal environment, financial environment and economic environment. The looseness of the external objective environment will directly affect the choice of corporate financing methods. When companies choose financing methods, they must follow tax regulations and consider the impact of changes in tax rates on financing. Changes in financial policies will inevitably affect corporate finance, investment, capital operations and profit distribution activities. At this point, the risks and costs of the financing methods will also change. The economic environment refers to the macroeconomic conditions in which companies conduct financial management activities. During periods of rapid economic growth, companies need to raise large amounts of funds through debt or issuing new shares to share the fruits of economic development. When the government’s economic policies are adjusted as the economic development status changes, the financing methods of enterprises should also be adjusted with the changes in the policies.

The choice of financing methods

According to the theory of preferential order in modern capital structure theory, the first choice for corporate financing is the internal capital of the enterprise. It mainly refers to the retained after-tax profits of the enterprise. When internal financing is insufficient, external financing is performed. In external financing, first choose low-risk types of debt financing, and then choose to issue new stocks.

At present, the financing order of most listed companies in China is to place the issue of shares at the top priority, followed by debt financing, and finally internal financing. This financing order can easily result in inefficient use of funds, weakening financial leverage, and boosting the preference for equity financing.

Choosing the more appropriate financing method has important influence on the later development of the company. Therefore, many factors must be considered in the financing process, such as: how much the current market economic environment affects, how much the financing cost of the financing method needs, and what risks exist in the financing method. Whether the company's profitability and development prospects are suitable for financing, whether the industry is competitive or not. This determines the actual conditions that companies need to consider in their development, and is completely foolproof in advance.

Listing opportunities and risks coexist

As one of the important factors in the external financing of enterprises, the listing of enterprises through the stock market to issue stocks, corporate bonds, trust products and other means directly to investors, is also the most widely used financing method for the development and construction of today's social enterprises. There are more than 1,800 listed companies in China, covering all walks of life. Here we need to address the opportunities faced by companies through listing through a single field.

There are many risks in the listing of companies, but they are also boosters for the rapid development of enterprises.

First, going public can reduce excessive reliance on bank loans. After listing, the company obtained capital from the capital market, and the asset-liability ratio was greatly reduced. The dependence on bank loans is reduced, and the bank’s credit rating will also increase. In the event of a sudden brake on the policy, it will not be too worried about the capital chain break.

Second, after the listing, it is necessary to introduce scientific corporate governance methods and establish a set of standardized management systems and financial systems in accordance with regulations, which will have a certain role in promoting the company's management level. If the stock market is like a magnifying glass, doing a good job badly will cause a strong reaction. Listing can increase the flexibility of corporate governance, and the listing of family businesses can move from a closed family system to an open one. In addition, listed companies have independent directors and are experts in various industries, which is equivalent to asking a nearby expert at a low price.

Third, there are free advice and advertising effects. After the company's listing, it becomes a public company, which has a certain role in promoting the company's brand. At the same time, the major media and related securities companies will also conduct free research and prediction of the industry's prospects.

Instrument Industry Listing Structure and Prospects

The listed companies of instrumentation occupy a certain share in the entire listed company. According to preliminary statistics, there are 59 listed companies engaged in instrument and meter manufacturing and services. Among them, there are 37 main instruments and instruments, and 22 companies that include instrumentation and industry crossover. There are 51 domestic listed companies, of which 16 are in Shanghai and 35 are in Shenzhen, of which 14 are small and medium-sized boards and 11 are of the Growth Enterprise Market. Listed 8 overseas, including 5 in Hong Kong and 3 in Nasdaq. There are 19 IAs, 11 science institutes, 11 plus medical instruments, 10 dedicated instruments and controls, and 8 electricians and suppliers.

As one of the hot spots for the development of manufacturing industry in recent years, the instrumentation industry involves energy conservation, emission reduction, environmental protection, Internet of things, and smart grids. It has ushered in a new round of development opportunities. Many companies want to seize and expand the current scale of development, through the means of financing can accelerate the development of enterprises. One of the reasons why some powerful companies have reached the scale and they are reluctant to go public is because they hope to get a ride through a certain government policy. The second reason is that the current environment and other factors will not reach the market. conditions of.