Study On The Financing Of Mu Yuan’s Preferred Stock

As a new financial instrument in China’s capital market,preferred stock has broadened the financing channels for enterprises.In 2014,preferred shares were officially piloted in China.After the guidance on piloting preferred shares issued by the state council on November 30,2013,the China securities regulatory commission published the pilot administration measures on preferred shares on March 21,2014,marking the official introduction of preferred shares into China’s capital market.As of December 31,2018,a total of 26 listed companies in China have issued preferred shares,with a total capital raised of 621.026 billion yuan,according to data disclosed in the 2019 China securities and futures yearbook.However,due to the imperfection of China’s preferred stock system,which limits its development,it has only been widely used in the banking industry.Among the 26 enterprises that issue preferred stock,only 7 are non-banking enterprises,with a total amount of 44.876 billion yuan,accounting for 7.23% of the total amount raised.Therefore,the study on the issuance of preferred stock by enterprises other than the banking industry will help promote the development of preferred stock system in China and play a positive role in improving the multi-level construction of China’s capital market and promoting the growth of China’s enterprises.Mu yuan stock is the first stock raising enterprise in China since the pilot implementation of preferred stock in 2014.However,due to the first issue of preferred stock,the enterprise’s own ability and experience are insufficient,which leads to some problems.This paper firstly introduces the industry background of mu yuan stock and the general situation of issuing the preferred stock.Secondly,in order to explore the motivation for the issuance of preferred shares,based on the analysis of relevant data of the company,it was found that the demand of alleviating the financing channels,replenishing the working capital,optimizing the capital structure and improving the corporate governance structure prompted the issuance of preferred shares.Then,according to the data analysis of the annual reports of the past six years from 2013 to 2018 before and after the issuan ce of preferred shares by mu yuan,as well as the comparative analysis of the relevant data of the same period with the enterprises of the same industry,"wen’s shares" and "young eagle farming and animal husbandry",it is concluded that mu yuan’s preferred stock financing has four problems: 2018 units of NCF decline reached 38.76% in enterprise operating funds did not run well,operation ability is insufficient to achieve the purpose of improve enterprise value,with steady operating conditions to ensure full specified amount pays dividends to preferred shareholders deserve,preferred shareholders and conflicts of interest between common shareholders;The causes of these four problems are: the high cost of capital generated by the preferred stock financing,the lack of reasonable and efficient use of the financing funds,the reduced profitability of the stock,and the potential rights of the preferred shareholders;Finally,the author puts forward some Suggestions to solve the financing problem of the preferred stock of mu yuan,such as strengthening the management of operating cash,improving the efficiency of using financing funds,improving the profitability of enterprises,and improving the internal shareholder management system.This paper mainly adopts three research methods: the first is the case study method,by analyzing the problems existing in the financing of mu yuan’s preferred stock and seeking the causes and countermeasures;Second,the literature research method,through the reference to the relevant bibliography,literature and other relevant network information review,the preferred stock financing related theories are sorted out and summarized;The third is the comparative analysis method.Through the comparative analysis of the relevant data of the same period between mu yuan shares and other enterprises in the same industry,"wen’s shares" and "young eagle farming and animal husbandry",the author finds out the shortcomings of mu yuan shares in dealing with the impact of preferred stock financing on enterprises,and seeks for solutions.The innovation of this paper lies in the following aspects: first,this paper conducts a detailed study on the preferred stock financing of non-bank enterprises from the perspective of the case of livestock industry;Second,the vertical comparison of the data before and after the preferred stock financing of the company and the horizontal comparison with the data of other enterprises in the same industry are adopted to show the risks and limitations of the preferred stock financing of the company in the most comprehensive way.Third,from the perspective of preferred stock promoting the development of Chinese enterprises,this paper puts forward some Suggestions: pay attention to the correlation between the interest balance among internal shareholders of enterprises and the improvement of corporate governance capacity.