Products & Services

Sector analyses

Introduction

Current analytical capacities in the market of transformed economies in particular do not provide for sufficiently independent sector analyses, while not all sectors are represented in the existing range on offer and many of them are missing altogether. A major drawback of the market is the dispersion of the range of available sector analyses, which does not follow the principle of consistent development of sector analyses in any uniform structure, and so comparability of the outputs is not assured. Being conscious of the importance of sector analyses within the process of advanced and prudent system of risk management, the ECRAI-External Credit Rating And Assessment Institution™ incorporated a sector analyses project into its product portfolio.

The aim of the project is to bring added value to the relevant parties on the market by providing sector analyses developed by applying a uniform structure, and developed consistently using data and information considered to be verified and reliable by the ECRAI-External Credit Rating And Assessment Institution™. At the same time, the objective of ECRAI™ is to provide the customer with a new perspective on sectors - sector not only from the perspective of the nature of specifics, but also from the perspective of global component effects on the sector as well.

Baseline approaches to sector analyses can be summarised in two basic approaches:

  • Global, European and local view of the sector
  • Prediction of general perspective and attractiveness of the sector

The detailed elaboration and the scope of analyses is tailor-made to the wishes of the customer, which are absolutely respected by the ECRAI-External Credit Rating And Assessment Institution™. Regular updating is an integral part of the sector analyses project.

Two documents represent the analytical outputs of the sector analyses project, differing in scope, length and substantiality. However, the structure of the final analytical document of the ECRAI-External Credit Rating And Assessment Institution™ is adapted to the customer requirements:

  • short analytical overview of the sector (basic parameters and development projection)
  • comprehensive analytical report based on customer requirements

The short analytical overview provides the customer with essential information about the sector. The overview is only a basic analytical document relating to the sector, and doesn't provide a general and comprehensive view of the sector, but instead only draws attention to certain facts and influences.

The comprehensive analytical report is a complex analytical document evaluating the sectors in question. In contrast to the short overview a sector evaluation is included, with classification into four groups:

  • highly attractive
  • attractive
  • stagnant
  • unattractive

Classification of sectors in terms of their perspective is based on the multi-criteria sector evaluation, whereby the criteria are uniform for all evaluated sectors in order to make comparison of sectors possible.

Furthermore, the comprehensive analytical report includes a forecast on general development characteristics and the monitoring of corporate influences on the sector.

From the macroeconomic perspective, we monitor and explain the chief volume parameters (share in GDP, in employment, in exports etc.), the quantitative concentration of the sector, share of the sector in GDP, share of industry in GDP, reference to kind of industry (processing...). In terms of macroeconomics, a significant part is also dedicated to the development dynamics of employment in the sector, the development dynamics of average monthly wages, as well as to the dynamics of average monthly wages in both industry and sector, the share of the sector in total exports/imports, import and export reliance, together with other macroeconomic indicators.

As part of the development of analyses, we put emphasis on analysing the sector and its global position in the economic environment, the position and perspective of the sector in countries worldwide and especially within the European Union, the dependency of the sector on development of global and EU economies, as well as foreign investments within the sector. We monitor development trends in countries around the world and in the European Union as well (export, import - countries of export, import, volumes), import demand in the sector and its dependency, volume of re-export, concentrations on similar markets, correlation with other sectors accounting for crises and negative influences in the sector and on the sector, or preferences and limitations in the sector (international agreements, artificial administrative barriers, etc.). The outcome of the analyses comprises correlations of European and global business cycles, with account taken of development of the sector worldwide and current and future effects on the sector.

Partial analysis of the sector in the domestic economic environment (non-financial factors) includes market analysis, analysis of the influence and activities of competitors, competitive relationships, the conditions and requirements for new competitors to enter the market, capital concentration with regard to competitors, possibilities of penetration of EU markets, EU support programs, state support programs, legislative frameworks (customs and tax legislation, in relation to EU or WTO (World Trade Organisation), import and export restrictions, standards for customer protection, the environment, foreign trade (share of countries in imports to the country, export trends of the country, share of EU and CEFTA countries), capital concentration within the sector, who creates the revenues and value added (enterprises as well as legal entities), the impact of regulated prices on the sector, customers and their payment discipline, the process of production restructuring, pros and cons compared with competitors and development tendencies, political interests and current problems of the sector in the particular country, as well as other relevant information related to the domestic economic environment relating to the effects of economic policy on the sector (price impacts, impacts of customs and tax legislation, pro-export measures, administrative measures, Environment Act etc.).

Attested databases comprise the basis for the financial part of the analytical document of the ECRAI-External Credit Rating And Assessment Institution™. The financial analysis contains comparison of the development of economic data and sector and economic indicators, analysis of significant financial data and indicators (liquidity, asset management, debt management, profitability etc.), synthetic view of financial situation in the sector using various financial models.

A component of each analysis comprises the sector development perspective, including a prediction of trends and development tendencies (production volume, employment, etc.), prediction of development of the financial situation within the sector, prediction of the impact of economic policy, transformations, privatisation, restructuring etc. on sector development, identification of potential risks within the sector, as well as the possible effect of globalisation on the sector, or capital concentration and a forecast of other actual selected key sector indicators, based on application of various financial models.