Research On Lifan's Debt Financing Risks And Preventive Strategies

At the end of 2015,the central economic work conference first proposed the policy of "cutting overcapacity,reducing excess inventory,deleveraging,lowering costs,and strengthening areas of weakness",and "deleveraging" became one of the main contents of China's economic work in the next few years;in 2018,China's automobile industry experienced negative growth for the first time after 28 years of sustained growth,and the decline of automobile sales rate in 2019 further expanded;in 2019,China's economic growth fell to 6.1%,a new low in nearly 30 years..In recent years,the development of China's automobile industry is facing a severe test under the background of the continuous decline of macro-economy,the continuous change of supply and demand structure,and the frequent adjustment of industrial policies.As a capital intensive industry,the overall debt financing scale of the automobile industry has continued to expand in the past few years,and the debt scale of 20 mainstream listed automobile enterprises has reached a new record of trillion level.Under the background of continuous decline in sales volume and continuous expansion of debt,and the debt financing risk faced by the automobile industry is also increasing.As the pillar industry of China's economy,the growth of automobile industry greatly affects the trend of China's economic development.In the past two years,Lifan automobile,Huatai Automobile,Chery Automobile,Huatai automobile,etc.have exposed different degrees of debt crisis.In the winter of2018,many automobile enterprises' performance has declined sharply,which makes many practitioners tremble physically and mentally,and also brings a chill to the economic trend.What kind of debt financing risks do some Chinese auto enterprises face,what kind,size and causes of the risks are,and how should we take measures to deal with the current difficulties? Studying these problems becomes the starting point of this paper.To solve these problems has an important warning function for the current debt financing risks faced by some auto enterprises in China's auto industry,and also has practical reference significance for preventing,resolving and avoiding debt financing risks.For this reason,this paper selects Lifan Industry(Group)Co.,Ltd.,a representative listed private vehicle enterprise,as the research carrier,and takes the debt financing risk and its preventive strategy as the research object.By analyzing the development history and debt events of Lifan,collecting the data of12 listed vehicle enterprises in passenger vehicle industry during 2010-2019,and using the financial analysis method,horizontal and vertical comparative analysis method,and decision-making method,in combine with relevant research theories,this paper makes an in-depth analysis and discussion on the exposure,identification,evaluation,causes and preventive strategies of Lifan's debt financing risks.In the research process,this paper selects SAIC Group,the leading enterprise in the passenger vehicle industry,industry average data and Lifan for comparative study,and uses Z-score evaluation model to evaluate the debt financing risk of Lifan separately.The results show that Lifan is facing huge debt financing risks due to the problems of too large debt financing scale,inappropriate financing proportion,imbalance of term structure allocation,and unreasonable financing timing.The root cause is that the risk can not be separated from the radical debt expansion and two hasty strategic transformation of enterprises,especially the strong march into the new energy automobile industry around 2014,which directly led to the outbreak of debt financing risk;At the same time,in the absence of effective risk warning,supervision and Prevention mechanism,the debt financing risk for several years has not been fully identified and prevented,so that the long-term accumulation of risk eventually caused a lot of crisis.Finally,based on the analysis of Lifan's debt financing risk,this paper puts forward the corresponding preventive strategies from following five aspects: enhancing profitability,broadening financing channels,adjusting term structure,stabilizing business strategy,and improving risk control system,and puts forward relevant suggestions from many aspects,in order to provide reference value for the resolution of Lifan's debt crisis,and warn other enterprises to take precautions.