Research On The Effect And Improvement Of Deleveraging Of HBIS Under The Background Of Supply-side Reform

As the pillar industry of China,the steel industry has always played an indelible role in the development of the national economy.However,after 2011,due to the impact of the macroeconomic environment and its own development model,the general benefits of the steel industry have declined,and the leverage ratio has continued to rise.In order to solve the limitation of high leverage on the development of enterprises,the central government proposed the goal and task of "de-leveraging" in the supply-side reform at the end of 2015.After the first year of deleveraging and the year of deepening,the overall leverage ratio of the steel industry has declined,but the problem of high leverage is still relatively prominent.The deleveraging work has not achieved significant results,and even individual companies have once again experienced an increase in leverage.As a whole,there is still a lot of room for effort to keep the industry’s average debt level below 60%.In order to consolidate the results of the previous deleveraging,the National Development and Reform Commission issued a notice of "Key Points for Reducing Enterprise Leverage in 2019",requiring enterprises to spare no effort to reduce leverage and resolve financial risks.On the basis of the deleveraging effect,iron and steel enterprises continue to reduce the leverage ratio and resolve debt risks,which is of great significance for improving quality and efficiency and achieving sustainable development.Therefore,how to actively and steadily reduce the leverage ratio of steel companies and how to use leverage to control financial risks and returns at a reasonable ratio have become urgent issues.This paper uses a combination of induction and case analysis to sort out relevant domestic and foreign literature on supply-side reforms,deleveraging,and deleveraging of steel companies.Taking China’s mega steel company HBIS as the research object,it summarizes its deleveraging strategies Based on the annual report data and public information,analyze the company’s preliminary deleveraging effect,explore the reasons for the unsatisfactory effect,and make suggestions for improvement.The study found that: HBIS has fewer effective measures to implement deleveraging,and the deleveraging time is relatively slow.The issuance of 8 billion yuan of renewable bonds in 2018 and the proposed allocation of 8 billion yuan in shares in 2019 have not yet landed.Measures,leading to unsatisfactory initial results of deleveraging by the company: the size of the existing debt is still large,the optimization of the leverage ratio is not as good as other enterprises,and the phenomenon of irrational capital structure has not been substantially improved.Lagged behind the industry average.Further analysis,in addition to the reason why the company’s deleveraging effect is not ideal,in addition to the relatively single deleveraging strategy,factors such as the original policy and economic environment,the company’s own profitability and management level need to be further improved,single financing channels,industry characteristics,and the company’s excessive investment and other factors It also makes the accumulated leverage ratio of HBIS difficult to reduce quickly.In view of the above conclusions,this paper believes that under the supply-side reform,HBIS can use various strategies flexibly to deleverage,and start from multiple aspects,both internally and externally to reduce leverage.Based on the company’s specific situation,this article puts forward the following suggestions:(1)Focus on controlling production capacity and consolidate the basis of deleveraging;(2)Deepen the transformation and upgrading strategy,implement cost reduction and efficiency measures,and use Internet marketing methods to fundamentally enhance the endogenous development of the enterprise Motivation,improve profitability and reduce leverage;(3)effectively use market-oriented debt-to-equity swaps,asset securitization and other new financial instruments to reduce leverage;(4)expand financing channels and increase equity financing;(5)Make full use of mergers and reorganizations to integrate industry resources and improve competitiveness to reduce leverage.At present,debt-to-equity swaps are the most direct and effective way to deleverage for HBIS,but from a long-term perspective,deepening industrial transformation and upgrading,and actively implementing mergers and reorganizations are good solutions to the problem of high leverage.