Research On Financial Risk Control Under The Diversification Of Jizhong Energy Group

With the support of national policies,China’s economy has developed rapidly,and the scale of coal enterprises has been constantly expanding.Now,it is impossible to meet the competitive environment of the company simply by relying on extensive development.In order to maintain the original advantageous position,coal enterprises have to expand business in other fields,and most of them adopt the diversification strategy with high leverage But diversification strategies are a double-edged sword,and a growing body of research is finding it ineffective in avoiding financial risks.Jizhong Energy Group is a large state-owned enterprise with "coal-based and diversified development",although Jizhong Energy Group has long tried to implement a diversification strategy,but there are some problems in the group’s diversified development model.At the beginning of 2020,the group defaulted on the bonds of Yongmei Holdings,and the pressure on redemption increased sharply.And even the "technical default" attracted people’s attention.Therefore,it is of certain timeliness and practical significance to study the financial risk control issues under the diversification strategy of Jizhong Energy Group.This thesis first to domestic and foreign relevant definitions of diversification strategy,diversification strategy,diversification strategy and financial risk correlation literature,combing the diversification strategy related theory and strategy of diversifying the risks of financial forms,its respectively affect the group’s financing,investment,and management from three aspects of behavior and activities.Focusing on the diversified layout and motivation of Jizhong Energy Group’s diversified operation,we understood the specific situation of the Group’s diversification strategy,and measured the degree of diversification of the Group by using the specialization rate(SR)and HHI values,and found that the Degree of Diversification of the Group was high.Then,based on the financial report data of Jizhong Energy Group and the relevant reports disclosed by the group,the financial situation of the case company was in-depth studied and analyzed,and the financial risks caused by the implementation of the diversified strategy of the group were identified as the three major risks of fundraising,investment and operation.The Z-score model was used to assess the overall financial risks under the diversification strategy of the group,and it was found that the group had large financial risks in 2020 and faced bankruptcy crisis.Finally,based on the three identified risks,this paper puts forward corresponding countermeasures: attaching importance to the green development of main business,broadening financing channels and strengthening financing management,strengthening liquidity risk early warning mechanism and comprehensive budget management,hoping to provide help for Jizhong Energy Group to implement the diversification strategy.At the same time,diversification strategy is widely used at present,hope to provide reference for other enterprises to implement this strategy,to ensure the smooth implementation of the strategy.