| As a pillar industry of China’s national economy,the real estate industry has reached a huge scale after more than 40 years of development,which has greatly contributed to the rapid growth of China’s economy.However,in recent years,the real estate industry has been overheated,with problems such as high debt and high cost highlighted,and the industry has become increasingly risky.The country has introduced a series of increasingly strict policies to regulate the real estate industry,and the "three red lines" regulatory policy proposed in August 2020 has limited the growth of debt of real estate enterprises with high debt ratios,further enhancing the regulation and control to guide the development of real estate enterprises in a healthy direction.Many real estate companies have defaulted on their debts and are facing pressure on their liquidity because they have reached the red line standard,showing great financial risks.In this context,this study takes the "three red lines" policy as the background,and selects the private listed real estate company BRC,which has exposed serious financial risks after the implementation of the policy,as the case study object,and uses financial risk management theory,capital structure theory and investment portfolio theory as the basis.And firstly this study identifies the financial risks qualitatively.Secondly,it quantitatively evaluates the financial risks of BRC by selecting different indicators through F-score model and factor analysis.Finally,it proposes measures to manage the financial risks.By analyzing the financial data of the company and its own development process and industry performance,this study qualitatively identifies the financial risks and analyze the specific causes from five aspects: solvency,operating capacity,profitability,growth capacity and cash flow capacity.Subsequently,the F-score model was used to evaluate the financial risk based on the financial data from 2017 to 2021,and it was found that the F-value of BRC was positive and high from 2017 to 2020,but it was-0.3012 in 2021,which was much lower than the critical value of 0.0274,judging that the company’s financial risk was very serious in 2021;then,it picked 21 indicators in five identified risk aspects,and 85 listed companies in the same industry were selected as samples,to establish a financial risk evaluation model using factor analysis,and the results showed that the common factors of the factor analysis model ranked low among the 85 industry sample companies,among which the combined earnings and growth risk factor F1,debt service risk factor F2,cash flow risk factor F3,and combined growth and cash flow risk factor F5 were all at the bottom of the industry,while the combined F score is-1.528,ranking 56 th in the industry,also at the bottom.The results of the factor analysis show that most of the real estate companies’ factor scores are in the negative range,and the overall financial risk of the industry is high,while the financial risk of BRC is also at the high level of the industry.Finally,measures to manage the financial risks are proposed from both short-term and long-term perspectives.The short-term measures are mainly to rescue the financial crisis and promote the operation back to the right track,mainly including applying for debt extension,seeking government help,shrinking the scale of investment,promoting sales return and removing inventory to reduce leverage.Long-term measures to guide the company’s healthy and sustainable development include closely focusing on changes in industry policies to develop with the trend,making reasonable investments and stabilizing operations to promote sustainable profitability,adjusting the financing structure and reasonably allocating debt maturities to optimize the capital structure,and establishing a financial risk early warning mechanism to manage risks in advance. |
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