| Since the reform and opening-up,real estate has been developing rapidly,industrial scale has reached its peak,and the speed of growth has slowed down gradually,and as macro-control policies continue to intensify,the real estate sector’s development outlook is increasingly grim.In this context,more and more real estate enterprises in China have begun to carry out diversified strategic transformation,hoping to diversify risks and seek new business growth points.In recent years,It is a crucial time for the diversification of the strategic development of real estate companies,particularly with the implementation of "Three Red Lines","Two Red Lines" and centralized land supply in 22 cities,the development path of real estate enterprises has undergone essential changes,and it has become an industry awareness to seek new profit growth points on the basis of consolidating the core competency of development.From the perspective of the trajectory of diversified development of real estate enterprises,after the initial explosive growth,the basic pattern of diversified development of real estate enterprises has gradually formed,but there are very few successful cases of diversified strategic transformation in real estate enterprises.Many real estate companies have fallen into financial risk because of their diversification strategy,and some of which even on the verge of bankruptcy.The storm of real estate companies will affect the stability of real estate financial market.Therefore,it is very important to avoid the financial risk of real estate enterprises.As a TOP enterprise in the real estate industry,Sunac China Holdings Ltd’s development process has always attracted much attention.In the early stage of development,Sunac China Holdings Ltd led the way with a radical expansion style.In 2017,Sunac China Holdings Ltd entered the cultural tourism industry with a high profile,marking the beginning of its diversified transformation,and the development of the diversification strategy carried out the radical style to the end,which eventually led to the aggravation of its financial risks,frequent thunderstorms,and a deterioration of its financial situation.The Sunac thunderstorm incident has sparked extensive discussions,and this article will analyze the financial risks under Sunac China Holdings Ltd’s diversification strategy in detail.First of all,the thesis about diversification strategy and financial risk is sorted out,so that we can understand the inner relation of these two problems in detail,and provide the thinking for the following case study.Then it introduces the concepts of diversification strategy and financial risk,and gives a brief overview of the causes of financial risk in the diversification strategy.Following the introduction of the literature and concepts,the basic situation of Sunac China Holdings Ltd as well as the related strategy of diversification were introduced.Secondly,the thesis analyses the financial risks of Sunac China Holdings Ltd by means of qualitative and quantitative analysis in combination with real estate firms,from four aspects:financial risk,investment risk,operational risk and cash flow risk,capital structure,external environment,strategic risk management,diversified industry integration,and equity concentration.The following reasons were obtained:(1)Sunac China Holdings Ltd has continuously expanded the scale of debt and excessively relied on debt in order to meet the capital demand in the process of promoting the diversification strategy.At the same time,due to the insufficient management of debt structure,it has finally accelerated the imbalance of enterprise capital structure,Increased funding risk.(2)Sunac China Holdings Ltd’s cultural tourism industry is facing a very unstable external environment.The diversified industry cannot continue to develop and erode corporate profits.At the same time,the profitability of the main business declines due to the complex external environment,which cannot guarantee the internal source of funds,affects the accumulation of competitive advantages of enterprises,and ultimately aggravates the financial risks of enterprises.(3)Sunac China Holdings Ltd lacks a separate strategic risk management department and has deficiencies in risk assessment,resulting in mistakes in diversification and reducing return on investment.(4)Sunac China Holdings Ltd’s entry into diversified industries mainly depends on the means of mergers and acquisitions.Due to the large span of diversified industries,the efficiency of mergers and acquisitions integration is low,which reduces the utilization efficiency of enterprise assets,leading to an increase in operational risk.(5)The equity concentration of Sunac China Holdings Ltd is high,and the formulation of diversification strategy is greatly influenced by Sun Hongbin,the controlling shareholder.The implementation style of Sunac China Holdings Ltd’s diversification strategy is obviously personal-more radical,which affects the scientific nature of enterprise diversification.Thirdly,the author collects and summarizes the measures Sunac China Holdings Ltd has been taking to deal with financial risks under the diversification strategy,and analyzes the response results of each risk based on the result of Sunac’s current financial crisis,and concludes that Sunac China Holdings Ltd’s financial risk has remained high or even increasing day by day,eventually leading to the financial crisis of the enterprise.Finally,according to the case,the corresponding conclusions are drawn and suggestions are put forward from four aspects: optimizing the capital structure,improving the dynamic evolution ability,rationally distributing diversified industries,and transforming the memory of enterprise management thoughts.This article hopes that relevant research can help Sunac China Holdings Ltd get out of the financial crisis faster,and also hopes that Sunac China Holdings Ltd will pay attention to risks after getting out of the financial crisis and stop following the old path,and also hope that other enterprises can learn from this in the process of diversified expansion,learn lessons,and do a good job in preventing and responding to financial crises. |
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