Research On Deleveraging Approach And Effect Of Non-ferrous Metal Enterprises

In response to the international financial crisis since 2008,the government implemented the "4 trillion" economic stimulus plan.Affected by this,some of China’s cyclical enterprises experienced problems such as excessive expansion and overcapacity,and the leverage ratio of the steel industry also rose rapidly.From the micro level,too high leverage ratio will reduce debt repayment pressure and increase financial risk;From the macro point of view,excessive leverage ratio may increase the systemic risk of social economy,and even lead to financial turmoil.High leverage problems cause the attention of the social departments,government departments have launched various leverage policies,put forward supply side structural reform and the "three to one drop one fill tasks such as",under the policy to promote,many enterprises began to take various measures to leverage,reduce leverage enterprise,for the enterprise production and business operation activities to create a good economic environment.The iron and steel industry is a typical representative of cyclical industries,and there are two major problems of long-term imbalance between supply and demand and excess production capacity.In this context,iron and steel enterprises also began to take deleveraging measures to alleviate the pressure of enterprise debt repayment,enhance the ability to cope with risks,and achieve sustainable development of enterprises.Based on the above research background,the main research question of this paper is to explore how Valin Steel achieves deleveraging and the analysis of the effect after deleveraging.The main research idea is that,first of all,this paper defines the relevant concepts of leverage,and introduces the theoretical basis related to capital structure,so as to provide theoretical support for deleveraging.Then,through literature reading,we can understand the reasons for the formation of high corporate leverage and the harm of corporate high leverage,and then summarize the existing deleveraging paths.Secondly,this paper introduces the background and current situation of deleveraging policies related to the steel industry.Considering that Valin Steel,as a state-owned enterprise,has taken deleveraging measures and achieved some successful experiences under the impetus of supply-side reform,this paper chooses Valin Steel as the case company to analyze how the case company deleverages,why it chooses this method,and the effect of the case company’s deleveraging,and provides reference for other steel companies.The research found in this paper:(1)Driven by the deleveraging policy,many companies have taken deleveraging actions,but there are many ways to deleverage.(2)Through the combination of case study method and event study method,this paper finds that after completing the market-oriented debt-to-equity swap,Valin Steel has created positive returns for the enterprise in a short period of time,and at the same time,various financial indicators of the enterprise in the gradual improvement,the future profitability and development ability will be further improved,and the corporate value will be enhanced to a certain extent.