| The development of the real estate industry is closely linked to the development of the national economy and plays an important role in promoting economic prosperity.2016 saw a gradual shift in real estate policy from stimulation to tightening,firmly positioning the property as "no speculation in housing".The real estate industry is characterised by large capitalization,long investment cycles and high financial risks.In recent years,many small and medium-sized real estate enterprises have declared bankruptcy because they could not bear the huge financial risks,and large enterprises like Evergrande could not escape the fate of bankruptcy.Seasen,as a real estate enterprise in a rapid growth phase,is in a stage of accelerating the development of setting up key city clusters across the country and has topped the gross profit of its industry in a number of cities.Behind the seemingly optimistic financial statement figures also lie financial risks that should not be underestimated.This paper selects Seasen as a case study,hoping to help it better understand financial risks and provide suggestions for risk management.It is also expected to provide useful reference and experience for other real estate companies in the increasingly challenging macro policy environment and fierce market competition,and to help real estate companies develop risk identification and control measures that are in line with their own operating conditions,prevent financial risks and improve their risk tolerance.This paper first establishes a basic understanding of real estate enterprises through the characteristics of the real estate industry and industry risks.With the help of Professor Edward Altman’s Z-score financial warning model to calculate the scores,it is found that the financial situation of Metro Holdings has a tendency to gradually improve from 2015 to 2021,but it is always in the danger zone of likely bankruptcy.The analysis of financial position is mainly divided into ratio analysis and qualitative analysis.The financial ratios of the enterprise were analysed in terms of four capabilities: growth capacity,profitability,solvency and asset management efficiency,and it was concluded that Seasen’ asset management capability was strong,while its growth and profitability turned weak and its solvency was insufficient.In terms of financial quality,the analysis of capital quality,asset governance,profit quality and cash flow quality reveals a good asset structure with operating assets as the mainstay and the profitability of assets,but also reveals the huge repayment pressure brought by the corporate financing method,the low asset preservation,the low profit quality and the highly unstable cash flow financial situation.On the basis of the financial analysis,this paper concludes that the main financial risks of Seasen are: imbalanced capital structure,high debt servicing pressure;slowing revenue growth,profitability level needs to be improved;and insufficient cash flow management ability.After the quantitative assessment and qualitative analysis of Seasen’financial risks,the causes are analysed in three dimensions: macro,industry and corporate.The formation of financial risks of Seasen is not only influenced by the macro-level economic environment and policy environment,but also by the operation mode and competitive environment of the industry,while the enterprise’s strategy of pursuing rapid expansion of scale and improving operational efficiency is also one of the reasons.In this regard,this paper puts forward the following suggestions on the financial risk control strategy of Seasen: make timely corporate adjustments according to the macro environment;adhere to the property business model of "residential +commercial";reduce the proportion of debt and seek diversified financing channels;scientifically plan corporate investment projects to protect corporate cash flow;and establish a financial early warning model. |
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