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INTERNSHIP REPORT
------ Darren Ye
-------------------------------------------------------------------------
Company: Haitong securities Ltd
Duration: 1 month (2013.7-2013.8)
Position: Account manager assistant
Catalogue
1. Company & work place description
2. Job obligations
3. Gains & Summarization
4. Supplemental information
5. Colleague evaluation
Company description
Haitong securities Ltd was founded in 1988 in Shanghai, China. It is one of the earliest and
largest securities companies which involve investment banking, asset management, securities margin
trading, funds, futures, PE investment, etc. And the company has featured in investment
banking, especially in issuance and underwriting for finance and high-tech companies, mergers and
acquisitions(M&A) . As one of the first companies that started private equity fund, Haitong has
earned abundant experience and made huge profit for its shareholders. Also, it is renowned for its
advisory service for the cultural and media enterprise’s M&As. Now, more than 200 securities sales
department have been established all over the country, which absorbed over 4 million investors to
register securities trading accounts.
According to Haitong’s global strategy, Haitong is presently enjoying high growth at its key
international businesses, such as QFII, cross-borders M&As, RMB fund, oversea ETF, etc. And
according to Htsec.com, “Haitong International, which successfully launched the first RMB-
denominated public fund in August 2010, has maintained a leading position in the sector of RMB
products in Hong Kong, and is one of first companies obtaining a RQFII qualification to provide the
investment channel for the offshore RMB.” (Company profile, 2013)
As for company culture, Haitong has been consistently following the operation philosophy of
“Practicability, Innovation, Prudence and excellence” and the operation principle of Standardized
management, Proactive Innovation, Prudent Operation and Earning Focus”. In accordance with the
operation philosophy and principle, Haitong has formed a standardized, scientific, precise management
system that maintains the company to develop steadily and safely, while the reward system works
effectively. These systems motivate the employees to work wholeheartedly and promote the sales as a
result.
Work place description
I worked in one of the most successful sales departments in Guangdong province. It is located in
the center of a hot business area where a large number of potential customers live nearby. There are 20
employees working here. Inside, investors can get various services such as open securities trading
accounts, trade stock,futures, funds on equipped computers with internet, and get investment advices
from professionals.
Every sales department consists of three parts— front desk(Marketing department) , middle
office, back office. Marketing director, who is responsible in achieving sales target assigned by
headquarter, is in charge of front desk. And chief operator, who takes care of internal operation of the
sales departmentt, leads back office.
Front desk, which can also be described marketing department, consists of sales managers lead
by sales supervisor. Sales managers work in different banks where they will introduce services to the
customers and ask them to open securities back to the sales department. But every morning, before they
go to the banks, marketing supervisor will gather the managers to either provide training programs or
hold an internal meeting.
Middle office contains customer service department, investment adviser. Customer service
department will inform the investors in terms of the problems related to their accounts. For example,
CSRC regulates the investors to do risk evaluation every two years. If it expires, the customer service
department will need to notice the investors to finish the risk evaluation either on the internet or come to
the sales department in person. In addition, investment advisers analyze the information gathered from
various sources and give investment advices to investors in terms of the trend that the market will go in
the next few days or which stock is recommended to pick and so on.
Back office is composed by front counter, finance department and technology support
department. Counter is operated by account managers. Accounts managers obligate to help investors to
register or cancel trading accounts, open or close up services, set up securities clearing banks, change
passwords, etc. In the lobby, Duty manager will assist the customers to fill in tables which are required
prior to going to the front counter. Technology support department accounts for maintenance of inner
system and computers.
Job obligation s
Job position: Assistant Account manager
Job skills required: Detail-oriented personality, strong communication skills, problem solving
skills, computer skills
As stated above, accounts managers is responsible for securities accounts. Any individual
account activities which mostly required customer to come in person such as change passwords, change
clearing banks, add in account information will go through the managers. To achieve the tasks, the
managers need to work in a group which is led by executive supervisor while utilizing the intelligent,
well-organized accounts management system. In the meantime, accounts managers are also authorized
to block accounts with the system if the number of stocks owned by one specific investor exceeds 5% of
total outstanding shares of a listed company and unblock the accounts if number of stocks fall below
limit. Moreover, they need to organize all the documents like the filled tables, securities borrowing and
lending agreement with private information from each investor will be collected and reserved in
storeroom by account managers behind the front counter. All of these documents labeled by numbers
will be put in folders that are divided into different intervals and then reserved in certain cabinets.
Gains and summarization
This is my very first time to get real work experience in security industry. As a finance major
student, this chance would be really significant for me to catch on to my future career and understand
what this industry exactly does. So, I treasured this opportunity a lot and utilized it to enhance my
professional know-how of security and strengthen communication skills such as teamwork skills,
customer service skills by collaborating with my co-workers and communicating with customers.
To begin with, I get a comprehensive overview of what one of the most prosperous security
companies does through the conversation with internal staff and research on the documents given by my
co-workers which comprehensively describe the company’s businesses. Haitong covers 8 areas of
businesses, which are Brokerage Business, Investment banking, M&A and Corporate Financing, Bond
Financing, International Business, Derivatives, and Fixed Income.
Brokerage Business is divided by Sales Trading Department, Institutional Services department,
and Margin Trading & Short Selling. Sales Trading department provides market information and
investment advices through daily SMS, daily investment strategy for VIP clients. One-on one asset
management services offer professional advices based on individual clients’ investment preferences and
risk appetites, real time monitoring clients, and risk analysis and investment recommending in time.
While the clients can get various services such as E-commerce, Call center, Channel service and IB
management. Institutional Services Department promote strategic cooperation with institution such as
containing fund management companies, Social Securities Fund, insurance companies to develop
Haitiong’s innovative business while enhancing competitive edge and innovative ability. Inside
institutional Services Department, there are two branches—Vip clients services and Research sales
which meet needs for diverse customers. Being among the first to gain trial qualification, margin
Trading & Short selling department was founded in December 2008, which earned Haitong the first
mover advantage in this field. Through this department, stock investors who have over 100 thousand
RMB financial assets and have the accounts opened for more than 6 months can either borrow stock or
capital from the securities company. Then, they can sell the borrowed stock at higher price and buy
them back at lower price to earn the price difference before the deadline when they have to return the
equal amount of stock or fund. As a explorer and leader n this market, Haitong has capital advantage and
supplies of securities advantage, which enable them to provide various and sufficient supplies of
securities for the investors. Furthermore, Haitong has applied a pre-model in which the unsecured credit
is granted with the credit line determined by customers’ credit rating, total assets within their accounts
and other financial assets, which makes the whole process become more flexible and simplified compare
to their competitors.
According to Careers-in-investment-banking .com, “investment banks help companies and
governments issue securities, help investors purchase securities, manage financial assets, trade
securities, and provide financial advice.” With nearly 10 year’s efforts, Haitong investment bank has
established a own brand, especially in the financial and high-tech enterprise underwritings. The
department comprises of over 210 high-caliber staffs with average age at 32 and average experience
over 3 years. Master and Ph.D degree holders account accounts for 71% of the total professionals. There
are 60 sponsor representatives and other 34 passing the sponsor representative exams and applying for
the qualification. With approval, the number of sponsors will reach roughly 94, ranking the top among
domestic securities houses.
M&A and Corporate Financing department is an investment banking unit. The main scope of its
businesses includes advisory services for acquisition, anti-takeover, merger, spin-off and repurchase of
listed companies, as well as financial advisory services such as assets restructuring, equity based
incentives, PE financing and so on. In the past three years the department has led tens of M&A and
assets restructuring projects for listed companies.
The client Asset Management Department is the business unit of Haitong securities destined to
carry out asset management of the company. Currently, the department offers a comprehensive series of
different products and customized investment service to different types of clients. According to Haitong
securities official website, the business scope of the company includes: directional business, collective
business, special-purpose business, QDII business and innovation business. Directional asset
management business is based on customized needs, provide high-end specialty customized service for
high net value institutional and individual asset. Collective Asset Management Business provides high-
quality asset management services for institutions and individual clients with a medium net value. Based
on investors with different risk preference, the company also launches classification collective plan, in
order to meet the needs of investors with low risk preferences or high risk preferences. Special purpose
asset management business designs asset management services for clients with special objectives. QDII
business invests in global market through collective plan, and special purpose plan. Asset securitization
business is backed by those fundamental assets with stable cash flows from enterprises or financial
institutions. Securities companies design special purpose plan to sell beneficiary certificates to
institutional investors and offer publicly and circulate those certificates in securities exchange.
Bond Financing Department focuses on the issue of fix income products including corporate
bond, financial bond and ABS. By the end of 2010, the department has successfully finished 12 projects
of corporate bonds as lead underwriter, raising RMB 12 billion, and one project of sub-prime bond,
raising RMB 3bn. It also accomplished other 200 or so projects of corporate bond, short-term bill, mid-
term not as lead underwriter or distributor. And based on the rich product mix, the department has built
an improved distribution network and maintained close long-term relationship with institutional clients,
including large commercial banks, insurances, mutual funds, and rural credit cooperatives.
For international business, Haitong has achieved significant progresses in international business
in recent years. It focuses on developing QFII, institutional B-share, cross-border M&A advisory
services to build its international network. The QDII team consists of nearly 30 professionals with rich
experience in Chinese market and foreign language skills. By the end of 2012, the total market cap of
QFII clients amounted to USD 30 billion.
Haitong is also one of the first few domestic innovative securities firms to set up Derivatives
Department. The department is actively preparing the floor derivative business with focus on stock
index futures, ETF, and trading, hedging, market making, and other businesses in relation to potential
exchange-traded financial tools. It also built a highly efficient quantitative strategic analysis platform
and automatic electronic trading platform with core know-how. So far, a professional team with
profound mathematical background has been formed at the Derivative department, all the members
graduate from domestic or oversea top universities with degrees of master or PHD who are also CFA
charter-holder or certified with the title Financial Risk Manager (FRM).
Fixed income department mainly handles the trading of treasury bond, corporate bonds, short-
term or mid-term commercial papers, securitized and innovative fixed income products. The department
has a professional trading team that is committed to using analyzing tools and pricing fixed income
products. It is also one of the most active trader in exchange market.
Besides the company’s businesses, I also learned the ways to analyze a company’s financial
statement to judge whether the data is reasonable or exaggerated. Financial analysis aims to truly
understand and estimate a company’s business performance and financial situation. Generally speaking,
there are four ways of financial analyzing- comparative analysis, trend analysis, factor analysis, and
ratio analysis. The main advantage of ratio analysis is to eliminate the influence of a company’s scale. In
general, we can evaluate the relationship between profit and risk by three aspects of ratios—the ability
to reimburse liability, operation capacity, profitability. The three aspects correspond with each other. For
instance, ability to profit will affect the short-term and long-term flexibility, and the efficiency of asset
management will influence profitability. So, these ratios need to be analyzed comprehensively.
The ratios to reflect ability to reimburse short-term liability are as follows:
Current ratio= Current assets / Current Liabilities
Quick ratio= Current assets – Inventory/ Current Liabilities
Cash ratio= (Cash+ Priced securities)/ Current Liabilities
Current assets can be used to pay for liabilities or daily operation. So, high current ratio implies the
company is capable of paying off the liabilities. But too high current ratio might also affect the
company’s ability to utilize funds efficiently and earn profit. In this case, quick ratio and cash ratio can
be used as supplement. Normally, it is considered safe if current ratio is approximately 2 and quick ratio
is approximately 1.
The ratios to reflect ability to repay long-term liabilities are as follows:
Debt ratio= Total debt/ Total assets
Interest income ratio= EBIT/Interest expense
High debt ratio demonstrates low protection for shareholders. On the other hand, too low debt ratio is
not really good. Reasonable level of debt indicates that the managers are able to utilize capital
effectively. Interest income ratio can inspect whether profit is enough to pay interest expense this year.
Higher this ratio is, stronger the company is in paying off long-term liabilities.
The ratios to display operation capacity are as follows:
Accounts receivable turnover= Net credit sales/ Average accounts receivable
Inventory Turnover= Costs of goods sold/ Average Inventory
Current asset turnover= Net sales/ Average current asset
Fixed asset turnover= Net sales/ Average fixed asset
Total asset turnover= Net sales/ Average total asset
If these ratios are comparably high, it means the efficiency of operation is high. But asset portfolio
should also be noticed during analysis, such as different types of inventories combination, quality of
inventories and applicability.
Ratios to show profitability:
Gross margin= Revenue- Cost of goods sold/ Revenue
Operating profit ratio= EBIT/ Revenue
Return on total asset= EBIT/ Average total asset
Equity ratio= EBIT/ Average total equity
Earnings per share= EBIT/ Weighted average common shares
Among the ratios above, gross margin, operating profit ratio and equity ratio separately show the
profitability of production, operation and the whole company. Higher they are, better profitability the
company has. But in reality we care more about a company’s future profitability, so we use three more
ratios to evaluate a company’s potential to grow.
“Sales growth= Sales in current period- Sales in last period/ sales in last period
Revenue growth= Revenue in current period- Revenue in last period/ Sales in last period
Net profit growth= (Net profit in current period- Net profit in last period/ Net profit in last period”
Last but not least, ratio analysis does not include cash flow. Cash flow is an all-important
element to evaluate a company’s performance which should be put into consideration. There are two
aspects to look into cash flow. One is the number of cash flow, positive cash flow shows that the inflow
cash can guarantee the need of cash outflow. But how can the company satisfy the need of outflow cash?
It depends on how the components of the cash flow coordinate with each other. Another aspect is the
quality of cash flow, which includes fluctuations of the cash flow, management performance such as
whether the inventories are outdated, accounts receivable have been collected. And the overall business
environment in the industry such as the growth potential, competition, products lifespan will also impact
a company’s ability to generate future cash flow.
Not only professional knowledge, I also obtain a lot in terms of how to behave and talk
professionally, communication skills and enhance all other skills which are required for the position. I
started with making some mistakes and being careless some time. By the end, I ended up being more
careful and developing very good relationship with all the co-workers.
This experience is really valuable and memorable.