Research On The Motivation,Path And Effect Of Deleveraging In Engineering Machinery Industry

In the wave of economic globalization,the competition among various industries is intensifying,and the global economic development is changing rapidly.Affected by the speed of the macro economic environment,the leverage ratio ratio of China’s non-financial enterprise sector continues to rise,and the rising leverage ratio ratio has brought great operational risks to the development of various industries.Especially for the traditional manufacturing industry,deleveraging has become a task that must be implemented and full of challenges.Since 2015,the central government has introduced a series of supply side reform measures to promote deleveraging in the physical enterprise sector.With the acceleration of deleveraging,more and more enterprises are participating in the ranks of deleveraging.The economic consequences of different deleveraging methods have been verified one by one,and deleveraging has achieved certain results.In recent years,the asset liability ratio of some enterprises in the construction machinery industry has continued to rise,and the actual debt ratio has exceeded the target debt ratio.Sany Heavy Industry Co.,Ltd.,one of the leading enterprises,was in a state of excessive debt before deleveraging,facing great financial risks.After taking a series of deleveraging measures,it resolved major financial risks and operational risks,and successfully controlled the leverage ratio steadily within a reasonable threshold.Sany Heavy Industry Co.,Ltd.,as a successful example of deleveraging in the domestic construction machinery industry,analyzes the deleveraging path it adopts in its business activities and the results it brings,which can provide certain experience and reference for the deleveraging of the construction machinery industry.First,this paper selects Sany Heavy Industry Co.,Ltd.as the research object,and uses three research methods: normative research method,event study method and data analysis method to carry out the research.Then,it introduces the concepts of leverage and deleveraging related to this paper,and summarizes the important significance of deleveraging in China’s construction machinery industry by combining the causes of high leverage in enterprises,the path and effect of deleveraging and other related literature.By elaborating on capital structure theory,risk management theory,enterprise value theory,and dual factor theory,theoretical support is provided for subsequent research.Then,analyze the current situation of high leverage in Chinese enterprises and the reasons for it,indicating the necessity of deleveraging in the construction machinery industry.Then,elaborate on the paths that enterprises can choose to deleverage,providing a reference basis for enterprises to choose deleveraging methods.Through the analysis of the case company,it was found that there were issues such as overcapacity,heavy debt burden,weak solvency and profitability before deleveraging.In response to the above issues,the four deleveraging methods adopted by Sany Heavy Industry Co.,Ltd.,including debt to equity swap,asset securitization,equity financing,and resolving excess production capacity,were analyzed and sorted out,and then financial performance was introduced Compare and analyze the changes in indicators before and after deleveraging between non-financial performance and market performance.Research has found that the deleveraging effect of Sany Heavy Industry Co.,Ltd.is significant,with changes in the company’s debt paying ability,profitability,operational ability,and innovation ability in a positive direction,and the level of financial and non-financial performance has been improved;From the perspective of short-term market response,the market response to debt to equity deleveraging,asset securitization deleveraging,and equity financing deleveraging is good;From the perspective of long-term market response,phased joint implementation of different deleveraging methods is more conducive to enterprises steadily reducing leverage;From the calculation results of Tobin Q value,deleveraging has improved the value and investment efficiency of enterprises,promoting the growth of Tobin Q value.In summary,this paper draws the following research conclusions:(1)deleveraging positively promotes the improvement of corporate financial performance;(2)Innovation output can accelerate the process of deleveraging enterprises;(3)Using different paths to deleverage will result in different market performance.Finally,in view of the risk of leverage ratio rising in the industry at present,relevant suggestions are put forward:(1)broaden financing channels and increase the proportion of equity financing;(2)Activate cash flow and improve the efficiency of fund utilization;(3)Increase investment in research and development,and deepen the innovation driven strategy.