Study On The Deleveraging Effect Of Shanxi Coking Coal Xishan Coal Power Group Company

Since the occurrence of the global financial crisis in 2008,in order to effectively cope with the impact of the financial crisis,China has introduced a large number of stimulus policies and entered the leverage cycle,resulting in the mismatch between supply and demand within the country,resulting in relative overcapacity.The transformation of the socio-economic background has significantly increased the leverage ratio index.To address this issue,China launched the central economic work conference in 2015,which clearly set the development goals of cutting overcapacity,reducing inventories,deleveraging,reducing costs and strengthening weak links.With five tasks at the core,we will deepen supply-side adjustment.As an old coal resource region in China,Shanxi Province accounts for more than30% of coal reserves,which is the main driving force for China’s energy development and economy.With the outstanding overcapacity in the coal industry in recent years,the leverage remains high and the industry situation is sluggish,many enterprises involved in the coal industry are facing the problem of increasing losses,and their coal business is seriously slowing down their own development.Therefore,deleveraging has become a top priority.Based on this,this article in view of the coking coal in shanxi xishan coal electricity group co.,LTD.(hereinafter referred to as the xishan coal and electricity)in-depth research,careful analysis in recent years the development of the enterprise data information,discuss the deleveraging,and from the upstream to sort out its way to leverage,from downstream based on combing enterprise value evaluation to their leverage effect,in order to extend and supplement to the existing research,get conclusion has reference and reference,the specific work and conclusions are as follows:In view of the deleveraging situation of xishan coal power plant,this paper mainly discusses from two aspects,namely the longitudinal study of the internal development situation of the company and the horizontal comparison between different companies in the industry.First of all,the vertical analysis was made on the change level of leverage ratio of xishan coal power from 2013 to 2019.It is found that since xishan coal power actively responded to the national policy,it has entered into the process of deleveraging on the whole,and the proportion of its assets and liabilities has been decreasing year by year.Further analysis shows that xishan coal power company mainly makes some adjustments to the structure and proportion of liabilities.Specifically,it reduces long-term liabilities and bonds payable with high risk and capital cost,and alleviates the repayment pressure and high interest of enterprises.In addition,shaanxi coal industry,another coal enterprise with similar asset size,similar products and the same industry,was selected for a horizontal comparative analysis to explore the differences between xishan coal power and other enterprises in the same industry in the proportion of non-current liabilities and the proportion of interest-bearing debt.According to the statistics and analysis of the annual report,it is found that theproportion of non-current liabilities and the proportion of interest-bearing liabilities of xishan coal power is lower than that of shaanxi coal industry,and the implementation ability of deleveraging is lower than that of shaanxi coal industry.However,in the aspect of long-term borrowing,the deleveraging performance of xishan coal power is outstanding,and the decline rate after 2017 is obviously higher than that of shaanxi coal industry.In general,xishan coal power has shown a positive deleveraging behavior and achieved remarkable results.Aiming at the way of deleveraging in xishan coal and power plant,this paper analyzes the willingness and ability of coal enterprises to deleverage from the inside.The results show that xishan coal power co.,ltd.mainly reduces its debt demand by adjusting its capital demand,optimizing its financing structure and providing its endogenous financing capacity.In terms of adjusting capital demand,the main performance is to reduce capital demand by reducing operating costs and sales expenses,which is particularly evident in 2019.At the same time,the turnover rate of total assets of xishan coal and power plant is better than the median value of the industry on the whole.According to the development data in recent years,it is not difficult to see that the capital operation situation of the enterprise has been significantly optimized in some years,and the total capital turnover rate is in a stable rising trend on the whole.Since 2017,the financing situation change,in the field of coal enterprise is difficult to obtain financing from outside,costs rising at the same time,in the face of such economic environment,xishan coal and electricity to gradually adjust the financing system,access to success compared with the average level of interest rates lower for the debts of the enterprise,thus effectively reduce costs,to further expand financing path,realizes the debt system adjustment.In terms of improving internal financing,the main performance is to improve retained earnings,and at the same time,the income structure has been adjusted to increase the proportion of operating earnings.In view of the deleveraging effect of xishan coal and power plant,the latest data in this paper can only be obtained in 2019.Due to the short data period after the implementation of the case company,this paper tries to select short-term profit indicators,such as cash flow and profit growth rate,to overcome the problem of short research data period.It is found in this paper that since xishan coal power implemented deleveraging in 2016,the company has significantly improved the two coefficients of asset return index and total capital return index,and the effect is good,which shows the positive effect of deleveraging.At the same time,there are also problems such as too high dependence on indirect financing,too single financing approach and mode,and low level of asset securitization.To sum up,the research in this paper reveals the deleveraging behavior of the case company xishan coal power,and based on the analysis of its deleveraging approach and effect,it provides certain reference and reference for other enterprises,especially coal enterprises,to respond to the national "three cuts,one cut,one supplement" supply-side reform,which is of positive significance.