Case Realcan Pharmaceutical To Implement Asset Securitization Analysis

More than ten years after the first asset securitization product was issued in 2005,China's asset securitization business has entered a rapid development stage from the pilot stage,which can be seen from the growth of this business.By the end of the first half of 2019,the issuance of asset-backed securitization products had increased by 38% year on year,and the market stock had increased by 45% year on year.This paper aims to analyze the assets securitization project of accounts receivable of ruikang pharmaceutical by combining theory with case study.Through the analysis of this case,this paper explores the process of the project implementation,the characteristics of the project and the impact of the implementation,so as to facilitate the enterprises planning to implement asset securitization in the future to obtain certain experience and inspiration.The so-called asset securitization refers to the process of transforming the illiquid assets that can produce predictable and stable cash flow into bond-type securities that can be sold and circulated in the financial market in the form of structural restructuring,and then used for financing.Generally speaking,asset securitization can be classified according to regulatory authorities,whether it is carried out in a country,and whether it needs to be reorganized before cash flow distribution.Receivables securitization is one of the types of asset securitization,the enterprise will be the real deal have accounts receivable,through a series of screening and restructuring package,true sale again to specific purpose vehicle(SPV),in order to achieve the bankruptcy isolation effect,and then by means of credit enhancement to reduce risk and issued to the qualified investors,to achieve the purpose of financing.Accounts receivable asset securitization solves the financing problem of rapid growth of accounts receivable but lack of working capital,and also provides a new idea of accounts receivable management for enterprises.Accounts receivable asset securitization has the following characteristics :(1)innovative financing methods,investors will pay more attention to the credit status of accounts receivable debtors,rather than the credit status of sponsors.(2)in structured finance,"real sale" is realized by setting up SPV to transfer assets and finally achieve risk isolation by means of bankruptcy isolation.(3)form financing,in which the underlying assets and the assets owned by the original equity can be separated,can be removed from the balance sheet in accounting.(4)low-cost financing.Credit enhancement mechanism can be used in the design of asset securitization products,which has a lower cost than other financing methods.First of all,this paper analyzes the implementation process and characteristics of the assets securitization project of accounts receivable of Ruikang Pharmaceutical.According to the analysis,the asset securitization project has the following characteristics: the basic assets can be purchased circulatively,the asset-backed securities can be classified into different risk and return grades,the excess coverage of cash flow income,and the internal credit enhancement can guarantee the repayment of asset-backed securities.Then,from the internal and external analysis of the reasons for the implementation of accounts receivable assets securitization.Among them,the external motivation is supported by relevant national policies and conforms to the trend of industry development.Internal motivations include widening financing channels,reducing financing costs and reducing liquidity risks.Finally,the paper analyzes the market effect and the influence on the business performance of ruikang medical asset securitization project.The wealth effect of the plan was quantitatively analyzed by event study method,and it was found that the implementation of the plan was recognized by external investors,which improved the stock price return of ruikang pharmaceutical.The financial index method was used to analyze the influence of the plan on the business performance,and it was found that the plan improved the profitability of the enterprise,optimized the capital structure of the enterprise,activated the accounts receivable of the enterprise,and reduced the financing cost of the enterprise.After the above analysis,is the summary and inspiration of this case.Through the analysis of the case,this paper draws the following conclusions: the implementation of accounts receivable securitization to ensure the company's capital needs;The implementation of accounts receivable securities improves the business capacity of the enterprise;The implementation of accounts receivable securitization reduces the financial risk of enterprises.In addition,the following enlightenment is drawn: enterprises must strengthen the credit management of accounts receivable,to protect the interests of investors and institutional service;It is necessary to ensure the independence between intermediary agencies;Enterprises need to reasonably distribute the concentrated risk of basic assets.