In this context, the performance and liabilities of listed automobile companies have once again become the focus of attention in the industry.
As the turning point of Chinas automobile market from positive to negative, how much financial pressure will the major listed automobile companies face in 2018? Securities Daily recently selected debt data of 20 major listed automobile companies including SAIC, Guangzhou Automobile Group, Changan Automobile and Great Wall Automobile, including 16 passenger car companies and 4 bus companies. Statistics show that the total debt of 20 automobile companies in 2018 exceeded trillion yuan to 1157 billion yuan, and in 2017 11.27 billion yuan. On that basis, it increased by 44.3 billion yuan, a record high in total debt in history.
At the same time, in 2018, the performance of major economic indicators of the automotive industry fell back, and the market performance and performance of major listed automotive enterprises were significantly differentiated. Last year, the total operating cash flow of 20 listed automobile companies dropped from 150 billion yuan in 2017 to 64 billion yuan, a decline of more than 50%. At the same time, as one of the important financial indicators to measure the business activity ability of enterprises, the assets and liabilities of automobile enterprises have risen sharply.
Lin Shi, an automotive industry analyst, told reporters that the asset-liability ratio of enterprises should be measured from two aspects, namely, looking at peers horizontally and comparing themselves vertically. Vehicle manufacturing industry is a capital-intensive industry, and generally has a high asset-liability ratio. However, if there is a sudden increase in asset-liability ratio, it is necessary to guard against investment risks. For automobile enterprises, how to optimize the allocation of debt funds, adjust the layout of production capacity and integrate marketing channels is of great significance to their development in the future.
Accumulated liabilities exceed trillion yuan
According to the debt data of 20 major automobile companies in the past two years, the average total debt of 20 automobile companies is on the rise. On the basis of 809.8 billion yuan in 2016 and 111.27 billion yuan in 2017, the total liabilities of automobile enterprises again exceeded trillion yuan to 1157 billion yuan in 2018, setting a new record in the history of total liabilities.
In fact, the total liabilities of FAW Xiali reached 4.394 billion yuan in 2018, although large-scale cash flow was obtained by reselling 15% equity of FAW Toyota, and net profit was 37.31 million yuan. However, the 97% asset-liability ratio is not only far higher than the average level of the industry, but also set a new high for the companys debt ratio.
In 2019, the first quarter results show that the total new liabilities of 20 auto companies have climbed to 16.2 billion yuan again. Among them, SAIC, BYD and Great Wall Automobile had the highest total assets and liabilities in the first quarter, with asset-liability ratios of 61.74%, 69% and 53%, respectively, while last years high-debt automobile companies even had insolvency.
In this regard, some accountants explained to reporters that there are no hard indicators for the high and low asset-liability ratio, especially the vehicle manufacturing industry is a capital-intensive industry, the level of asset-liability ratio and whether it is reasonable depends on the comprehensive factors such as the scale of production and operation of the company and the degree of internationalization. But if it continues to exceed 80% or even higher, it means that the operation of the enterprise is facing greater risks, because the enterprise has almost no assets of its own, and most of the assets are formed by debt.
In addition, the reporter of Securities Daily noticed that the continuous borrowing behavior of automobile companies did not seem to correspondingly improve the companys profitability in the auto market last year. For example, the liabilities of SAIC Group increased by 10.33% in 2018, while net profit only increased by 4.65%. The liabilities of BYD and Jinlong Automobile Group increased by 13.32% and 5.35% in 2018, while net profit fell by 31.63% and 66.82% respectively.
New Energy Vehicle Subsidies Decline
Increasing financial pressure
Under the negative growth of the automobile market, the incremental contraction intensifies the competition of the stock market. The large-scale terminal preferential price reduction makes the inverted price of car model common, which further affects the smooth return of cash flow of automobile enterprises. Reporters noted that in 2018, 10 automobile companies, including Guangzhou Automobile Group, Changan Automobile, Jianghuai Automobile, Ankai Bus and so on, had negative operating cash flow, and their operating income could not meet their expenditure, and their near worries loomed.
In response, some automobile industry securities analysts told reporters that in recent years, the scale of domestic automobile enterprises has increased, resulting in a relatively rapid increase in the absolute number of liabilities. Debt operation must be adapted to the needs of capital operation and the speed of capital turnover. We should not only pay attention to the appropriate proportion between total liabilities and self-owned capital, but also pay attention to the matching relationship between capital operation structure and liabilities structure.
At the same time, the decline of subsidies for new energy vehicles in 2018 has also led to a doubling of pressure on automobile companiescapital and a significant decline in their performance. Data show that the government subsidies of seven auto companies last year are higher than their current profits, which means that if the subsidies are deducted, nearly half of the listed auto companies will face losses or loss expansion.
Taking Jianghuai Automobile as an example, its 2018 financial report shows that the company lost 378 million yuan in bad debts during the reporting period, of which accounts receivable account for more than 99.2% of the total loss of bad debts, while BYD, as a major recipient of subsidies, accounted for 70% of the annual net profit of 2.78 billion yuan.
In fact, with the growth of the business scale of automobile enterprises, their liabilities also increase. Long-term high debt ratio will affect the fund flow and strategic planning of automobile enterprises, and the lack of funds will lead to the difficulty of further development of their business, thus affecting the profitability of enterprises.
In this regard, Cui Dongshu, Secretary-General of the CPPCC, believes that the new energy vehicle enterprises themselves need cash flow. If there is no cash flow, it will be difficult to finance, which will affect the banks equity re-guarantee and re-mortgage, and the cascade constitutes an increase in the investment cost of the automobile enterprises, which will naturally bring greater pressure on the operation of the enterprises.
Individual liabilities account for 43% of the industry.
It is worth mentioning that, as the leading enterprise in the automotive industry, the total debt of SAIC Group increased by 10% to 498 billion yuan in 2018, which means that the debt of only one company accounted for 43% of the total debt of 20 companies.
According to the Annual Report of Shanghai Automobile Group in 2018, the correspondent of Securities Daily found that the five items that made the companys liabilities high were 125.265 billion yuan of accounts payable, 71.889 billion yuan of deposits absorbed and deposited in the same industry, 65.941 billion yuan of other accounts payable, 15.555 billion yuan of advances in current liabilities and 14.414 billion yuan of non-current liabilities due in one year.
In this regard, a securities person explained to reporters that, combined with the profit statement and cash flow statement, the operating income of SAIC Group in 2018 was 90.2194 billion yuan, an increase of 3.62% compared with the same period last year, and the net profit increased by 4.65%. It can be preliminarily judged that SAIC Groups asset utilization efficiency is higher and the increase of assets is more reasonable. The increasing corporate debt should be related to the large-scale expansion in recent years. Generally speaking, the risk of the companys solvency is not high, but it still needs to guard against financial risks.
For the high growth of assets and liabilities of SAIC Group, some insiders said that rapid expansion is an important driver of high corporate liabilities, and the rapid development of SAIC Group can not be separated from the help of debt. From the standpoint of shareholders, when the total capital profit margin is higher than the borrowing interest rate, the greater the debt ratio, the better; and from the perspective of enterprise financial management, the company should make full use of the borrowed funds to bring benefits to the enterprise, while reducing the financial risk as far as possible.
In the view of the above-mentioned people, the essence of modern automobile enterprisesoperation is capital operation, including investors investment in enterprises, i.e. paid-in capital and debt capital through borrowing. Moderate liabilities are the need of financial management. At the same time, how to optimize the capital structure, reduce the cost of financing and improve the efficiency of capital operation has become the central link of modern enterprise financial management.
Source: Liable Editor of Securities Daily: Yang Qian_NF4425