265 A-Share Companies Survive on Govt Subsidies and Debt

Economic Information Daily blasted the zombie company phenomena today, publishing an article which claims 265 listed A-shares are zombie firms existing on government handouts and debt. Economists quoted said these firms distort the capital markets, misallocate resources, mislead investors and encourage gambling, while another noted these firms also benefit from an assumed guarantee by local governments.

While lying on the A shares continued to financing, while get a lot of subsidies from the government every year. After a large number of capital market "blood", part of the listed company's efficiency has not improved even further deterioration trend. There are 265 A-share listed companies has become a "zombie companies" Capital market, its high debt level, the amount of inventories rising, squeeze a lot of financial resources, but also to the financial system risks.

...Excess manufacturing capacity, taking credit resources, the accumulation of financial risks, "zombie companies" has become an obstacle to industry growth and economic growth of the virus. In the A-share market, a large number of "zombie companies" through government subsidies, insurance and various shell means "hang on" A-share market does not go, continue to enjoy the convenience of financing.
From the level of indebtedness, as of the end of the third quarter of 2015, above 265 listed company's overall asset-liability ratio reached 68.65 percent, higher than the A-share market as a whole, non-financial corporate debt ratio by 8 percentage points, ending its total liabilities reached the 1.61 trillion yuan. Worthy of attention is, at the end of 2014, it said only 265 listed companies net interest expenses reached 44.679 billion yuan, compared with 42.701 billion yuan over the same period in 2013 continues to grow. For these companies, it continues to rely on debt in order to survive. At the end of the second quarter of 2015, the total amount of stock these companies reached 359.5 billion yuan, 332.2 billion yuan over the end of 2014 continues to grow.

  Since 2012, the above-mentioned 265 listed companies, 133 were additional fund-raising total funds raised reached 328.135 billion yuan. Among them, the additional funds raised more than 1 billion yuan of 75 have more than 50 million, there are 15, more than 10 billion yuan has four. However, in the capital markets, a lot of "blood", the part of the listed company's efficiency has not improved even further deterioration trend. Shougang shares, for example, in 2014, Shougang shares were additional fund-raising, fund-raising total of 9.965 billion yuan, but the net profit indicators in 2014, Shougang shares net profit attributable to shareholders of parent company 62.64 million yuan, the first three quarters of 2015, a loss of 567 million yuan.
Some firms on the verge of delisting have received government subsidies:
With 2015 annual report disclosure peak season, many companies are facing delisting risk brains were "security shell war." Public information, in order to avoid the fate of being delisted, the current A-share companies is planning a number of ST asset restructuring. Among them, some of the verge of delisting the company received a large government subsidies. Data show, * ST Silver Pigeon, * ST and * ST day of Tiens are obtained at the end of government subsidies, the amount was 36 million yuan, 7.66 million yuan and 34.4 million yuan.

... Data show that government subsidies have become an important source of revenue above 265 listed companies. From 2012 to 2014, 265 listed companies confirmation government subsidies 12.837 billion yuan, 10.908 billion yuan and 11.889 billion yuan, a total of 35.634 billion yuan. But only in the first half of 2015, it had 265 listed companies, 221 received varying amounts of government subsidies, the total amounted to 7.018 billion yuan. Since 2012, these 265 listed companies have received government subsidies of 42.652 billion yuan. Data show that in 2014 a total of 1676 A-share listed companies received government grants in varying amounts, up to a total of 68.624 billion yuan. Seven companies received government subsidies of 1 billion yuan or more.
Economists back up the findings:
Chinese Academy of Social Sciences Institute of Finance, deputy director of the Financial Markets Research Center, said Yin Zhongli, A shares "zombie" listed companies mainly in the steel, coal, cement and other asset-heavy industries, years of losses and facing pressure to the stock, the need to maintain its normal operation a lot of cash flow, survival has been mainly dependent on government support. Commercial Law Institute of Renmin University of China Judicial Conciliation said, now clean up "zombie companies" to resolve the overcapacity heavy task, some local governments for performance concept, social stability, taxes and other factors to consider, still be no basis for subsidies, hindered these industrial cleanup process. Finance and Securities Institute of Wuhan University of Science and Technology Dong Teng believes that the hands of the government does not quit, "zombie companies," can not withdraw from the market efficiently, this is misleading investors, encouraging speculative gambling, signal distortion shares, pollution A-share market and makes the stock market distortions in resource allocation function.

Economist Lin Yifu is determined, mainly due to "zombie companies" do not quit, generally get policy support, "some state-owned companies to hire a lot of people, if quit immediately appear great tide of unemployment will affect society stable. "these companies have to maintain employment policy burdens. In addition, part of the business of local GDP, local tax and employment contributed significantly, if bankruptcy or exit, the same influence. It is for the local government's "policy subsidy or protection," enterprises only the "invisible guarantee." Similarly For banks, these companies when you quit, "the original borrower will become the bad loans." So thanks to the stealth guarantee of local governments, will continue to borrow, continue to exist.

Economic Information Daily: 政府补贴续命 265家上市公司“僵尸化”

No comments:

Post a Comment