Research On The Influence Of Vertical Integration Degree On Corporate Financial Performanc

In the outline of the 14 th Five-year Plan,the Chinese government formulated the strategic goal of "coping with climate change and reducing carbon emissions",and the ambitious goal of carbon neutrality should be achieved by2060."Carbon peak and carbon neutral" has become the core issue of modernization.Based on the national strategic plan and the relevant policies of the ministries and commissions on "carbon neutrality",energy conservation and emission reduction are being promoted with three main focus:the energy revolution,industrial restructuring and popularization of new energy electric vehicles.Influenced by national policies and catering to social needs,the new energy electric vehicle industry has seen strong growth.The deep integration of the new energy industry chain has become the development trend of the industry.Enterprises with an integrated upstream and downstream industrial chain layout will be more likely to in the future in the future commercial struggle.As an important raw material metal for the cathode material of electric vehicle battery,the strategic choice and layout of its manufacturers are also deeply affected by the policies of the new energy industry.In the process of accelerated the integration of the new energy industry,it is worth discussing whether the upstream cobalt metal smelting enterprises can actively integrate into the new energy industry and extend the industrial chain to improve their own financial performance.This thesis introduces two enterprises mainly engaged in cobalt smelting with different degrees of vertical integration,Huayou Cobalt industry and Hanrui Cobalt Industry,for comparative analysis.The two companies’ main metals are similar,cobalt and copper.And the raw metal ore come from the Congo(DRC)mine.The raw material grade and raw material transportation distance are similar.The price of cobalt is characterized by high volatility,and about 80% of the manufacturing cost of cobalt products of the two companies is the cost of metal raw materials.Both companies purchase cobalt and copper based on MB(British Metal Guide)cobalt price and LME(London Metal Exchange)copper price.In addition,the spot price of related products also changes with MB cobalt price and LME copper price,so the value comparison basis of the two companies is the same.In order to study the impact of vertical integration on the financial performance of Huayou Cobalt and Hanrui Cobalt,this thesis analyzes the motivation of vertical integration of these two companies,sorts out the process of vertical integration of case enterprises,and finally measures the two companies’ vertical integration quantitatively and qualitatie.As an enterprise strategy,vertical integration will inevitably have the characteristics of enterprise strategy such as overall,long-term,and financial indicators.The financial status are affected by multiple factors.So this thesis combines the quantitative and qualitative analysis of vertical integration,with industrial organization and transaction cost theory as the starting point.Core financial indicators are used to systematically and comprehensively study and discuss the profitability,operation,growth and debt paying levels of multiple links of vertical integration of enterprises,and summarize relevant experience by referring to the evolution status of the enterprise.Through the research,it is found that the deepening of vertical integration brings new profit points,which makes the profitability of Huayou Cobalt increase step by step.But it is always weaker than Hanrui Cobalt.This due to product technology difference and drag of trade business.The debt paying ability of Huayou Cobalt is weaker than that of Hanrui Cobalt.However,with the deepening of vertical integration,the debt paying ability of Huayou Cobalt has not been further weakened.The pressure of borrowing has been eased by the directional additional issuance of new shares and the improvement of profitability.With the deepening of vertical integration,asset turnover efficiency of Huayou Cobalt decreasing,Hanrui Cobalt still has advantages compared with the same period.The deeper penetration of The upstream and downstream of Huayou Cobalt has brought explosive growth of revenue.Compared with itself and Hanrui Cobalt in the same period,it has demonstrated stronger growth ability.