What does sectoral analysis, research of economic sectors and their outlook mean?
Managers, owners know their company very well, know their competitors, but most likely neither of them has a full insight on the entire industry in which they are operating in. Today it is extremely easy to find a great amount of information, but this usually has low quality. Danube Capital’s professional team does not only collect this information, but also analyse them; determine the trends concerning the past and the future, and make forecasts, too. Sectoral analyses inform the managers, owners about the given sector’s development for the following three years; how overheated a sector is; what the chances of growth, stagnation, reduction are in that sector during the next few years.
When do I need a sectoral analysis? What can I use it for?
A sectoral analysis can be useful in many corporate situations. In case of a potential investment, a company must consider whether it is worth expanding existing capacities or purchasing a company operating in the same sector. If a manager would like to know which sector is worth investing into (diversification of its function) or would like to validate the diversification strategy; hence, an industrial outlook is essential.
Obtaining valuable information is crucial for every company, therefore, the specific sector must be continuously monitored to know what kind of opportunities and risks it may have; and how to react to them in time. Each company manager, owner would like to know if the company’s key financial indicators are better or worse than its competitors’ (benchmarking) or than the whole industry’s indicators and how can the company be more competitive than its opponents, to reach above average financial, operating ratios.
How can a sector be analysed?
Our sectoral analyses include time series and cross-sectional analyses of data available in the given industry. Hence, we measure the past performance of the industry players to their actual performance and measure the industry players’ performance to each other.
A full sectoral analysis consists of three main parts, which are available separately as individual packages. These describe the sectoral trends, the projection of the industry’s performance for the following 1-3 years and how the examined company is expected to perform in terms of profitability, indebtedness, liquidity, productivity/efficiency, sectoral market share compared to the sectoral average and its main competitors.
How is a sectoral analysis conducted? What do I, as a potential client, have to do?
The Information from industry players (businesses, professional organizations, policy makers) are synthesized and interpreted by Danube Capital’s professional team. In addition, legislative changes, domestic and international sectoral and technological trends are also presented.
From a sector perspective, it can be determined how the industry has performed in recent years: whether the sector has been deteriorating, stagnating, or improving. Apart from sector performance compared to other industries, other certain indicators are also included (e.g., order backlog data or sentiment indices). Furthermore, a forecast of the prospects of the sector is also included.
What does Danube capital offer me?
Our sectoral analysis provides forward-looking information about relevant sectors, which may influence the company’s business decisions. The client chooses the sector(s) to be analysed. The frequency of the analyses can be quarterly, annual, or occasional. It can also be prepared for the whole sector, concerning competitors and it could also contain forecasts for the upcoming years.
Why is it worth involving a professional in conducting a sectoral analysis?
Consider a given company, where sales have increased by 5% from one year to the next, but without a detailed examination it cannot be said whether this was due to the company’s steps or the market itself has become larger. After all, it is possible that the sector itself expanded by 5% and the company did just the same as the year before. Namely, the slice of cake only got bigger because the cake grew, not because the company gained market share.
To properly assess the situation, it is necessary to see whether an economic sector is currently in an upward/downward trend or is stagnating, what processes are taking place at home, in the region and abroad. Based on the sector growth / decline forecast, the company can review its investment ideas and develop plan to adapt to future circumstances.
How long does the sector analysis take? What will it cost me?
Why should I choose Danube Capital? What kind of references do they have and where can I find them?
Over the years, Danube Capital’s professional team has produced several sectoral outlooks and analyses covering several industries (e.g., construction, energy, agriculture, food, automotive). Our references can be found at danubecapital.hu.