The Research On The Financing Structure Of M Communication Group

During the thirty years of reform and opening-up in China, the investment in highway industry grew very fast. Recently the total highway mileage of china reached 65,000 kilometers, ranked the second in the world after USA. This rapid growth come partly from the effort that government take to break through the bottleneck of transportation, partly form the investment on highway itself is some kind of catalyzes to economy. The financing of highway project is relatively easy for the following reasons: the toll road is very popular mortgage in china, the toll road revenue is very stable in nature.But in this developing process, for the dual nature of public welfare and profit making in this industry, all the provincial highway industry companies have the same characteristic: including the absence of equity capital, very high share of mortgage loan, the long duration of loan and very small proportion of direct financing. From those aspects, we concluded that the independent legal entity structure of highway industry bring some liquidity risk and operation risk, and the two outstanding problems in financial structure are the over reliance on indirect financing and the unmatched assets and liabilities. As the sole company that invested in the whole region of M province, M group got the same problems mentioned above.The literature research method, documents system-analysis method and expert interviews method were used in this paper. We firstly discussed the determinant theory of financial structure, analyzed the basic situation of whole state-owned highway companies and the basic causes of financial structure problems. Secondly, we choose the M group from which we can easily get information and literature as the object of study, and we analyzed the basic organization structure, industry characteristics, business model, financing situation and financial information. All of this basic information can be taken as background and the financial information from the consolidated financial statements as the supplements, we used the statistical methods and found M group's problems such as limited resource allocation optimization, direct financing difficulties, financial issues such as short-term loans with long. We proposed the possible solutions to the financial structure problems of M group: we could adjust the financial structure dynamically through the perfection of the financing decision making mechanism, we could minimize the funding risk through the forecasting of cash flow, we could construct group cash pool system to develop the new internal financing channel, we can develop more kinds of direct financing method to reduce the financing cost etc.Finally, this paper concluded that securitization of M Group's assets by being Listed as a whole is the best way to improve M Group's financing structure, provided that the government properly resolve the non-profit project.