Huawei, which is not short of money, is going to issue debt again.
According to the announcement of Shanghai clearing house on October 31, Huawei Investment Holding Co., Ltd. (hereinafter referred to as Huawei) will issue the second phase of medium-term note 19 Huawei mtn002 from November 5 to 6, with an issue amount of 3 billion yuan and a term of 3 years.
The issuance of bonds is long in Huaweis plan. On September 11, Huawei disclosed the prospectus of medium-term notes, which shows that the company is seeking to issue public bonds in China for the first time. Huawei has registered two phases of medium-term notes, each raising 3 billion yuan, which will be used to supplement the working capital of the companys headquarters and subsidiaries.
The first issue of 3 billion yuan issued by Huawei on October 22 attracted 9.23 billion yuan of subscription funds, with a subscription multiple of 3.08 times.
According to the data disclosed by Huawei, as of the end of the third quarter of 2019, the companys accounts had a monetary capital of 253.2 billion yuan. That is to say, Huawei, with abundant cash flow, is actually not bad for money. Why does Huawei raise money by issuing bonds?
Or 3 billion yuan, Huawei issues bonds again
According to the prospectus of the second phase of medium-term notes in 2019 disclosed by Huawei, the amount of medium-term notes issued by Huawei this time is 3 billion yuan, and the payment date is November 7 and November 8.
As for the reason of issuing bonds, Huawei said that it expected all businesses of the company to maintain a stable growth trend in the future, and capital expenditure will further increase. The medium-term notes of 3 billion yuan are planned to be issued this time, which will be used to supplement the working capital of the companys headquarters and subsidiaries.
According to the prospectus, the issuance rate of the interim notes is finally determined through centralized bookkeeping and filing, and centralized placement. The lead underwriter and bookkeeper are China Construction Bank Co., Ltd. According to the credit rating announcement, united credit rating Co., Ltd. rated the long-term credit rating of Huaweis main body as AAA, and the credit rating of Huaweis second interim bill was AAA, with a stable rating outlook.
The 3 billion Huawei 2019 phase I medium-term notes issued on October 22 are the first time Huawei has issued bonds in China, which are sought after by the market. The qualified subscription amount reaches 9.23 billion yuan, and the subscription multiple reaches 3.08 times.
In terms of bond price, the final issuance interest rate of Huaweis last 3 billion yuan medium-term notes was 3.48%, 48 BP lower than the average interest rate of the bonds in the same period of that month, and even lower than the interest rate of AAA level central enterprise bonds such as CNPC group and state power investment.
Huawei disclosed that at present, the company has one domestic medium-term note, totaling 3 billion yuan; its subsidiaries have four overseas US dollar bonds, totaling 4.5 billion US dollars.
Why does Huawei, which is not poor in money, issue debt? Ren Zhengfei once said that
On October 30, the third quarter report disclosed by Huawei in the inter-bank market showed that in the first three quarters of this year, Huaweis operating revenue was 60.3 billion yuan, up 24% year on year, and its net profit was 53.5 billion yuan, up 21.59% from 44 billion yuan in the same period last year.
In addition, the balance sheet shows that by the end of the third quarter of 2019, Huaweis current assets with a total assets of 771.1 billion yuan have reached 642.1 billion yuan, and the monetary capital lying on the account has reached 253.2 billion yuan.
The cash flow statement shows that Huawei has abundant cash flow in all aspects. In terms of investment activities, the disposal of investment funds and other financial assets has increased by more than 100 billion yuan compared with last year, while the change in cash inflow from financing activities is the most obvious, and the cash inflow from borrowing has more than doubled compared with the same period last year.
Since the cash flow is sufficient, why does Huawei issue bonds continuously?
According to securities firm China, Ren Zhengfei, the founder of Huawei, once said when talking about Huaweis debt issuance, the cost of debt issuance is very low, and the cost of financing is only 4%. If employees increase their investment in the enterprise, the cost is too high, and the dividend is too high.
About the issue of debt, Ren Zhengfei said that he didnt know in advance. He only called the people in the asset management department to ask why they wanted to issue debt when he saw the news outside. At that time, the asset management department said, we must issue debt under the best conditions to enhance the understanding and trust of the society. We cant issue debt when its difficult.
In the past, Huawei mainly financed in Western banks. Now, the financing channels of Western banks are not very smooth. Huawei will try to change to domestic banks. Anyway, they will pay as much as they like, because there is no problem of repayment, and our funds are relatively abundant. When we have more money, we hope to give more support to universities, scientific research institutions and standards organizations, support the development of the world, and not narrowly defend our own interests. Ren Zhengfei said.
In the medium-term note credit rating report, the United credit rating company believes that although the uncertainty of the external environment puts some pressure on the sustainability of Huaweis performance growth, with years of technology accumulation and leading position in the industry, Huawei is expected to continue to maintain good business and financial performance in the future, with strong overall anti risk ability.
Therefore, according to Lianhe credit, Huaweis main repayment risk is very small, medium-term notes have strong repayment ability, low default risk, and its rating outlook is stable.