Ministry of Railways has nearly 2 trillion short-term liabilities for short-term solvency

The Ministry of Railways will tender 20 billion yuan in short-term financing bills tomorrow. This is already the 7th bond financing by the Ministry of Railways during the year. Due to the lack of equity financing, the Ministry of Railways used a large amount of debt financing in the construction of high-speed railways, which has caused signs of deterioration in its financial statements. Industry insiders worry that after a few years, railway debt will be "bigger."

The Ministry of Railways has issued over 100 billion yuan of debt this year. The Ministry of Railways has issued three rounds of ultra-short financing bills worth 10 billion yuan each, two short-term short-selling bonds (20 billion yuan and 15 billion yuan respectively), and one mid-term bill of 20 billion yuan; Tomorrow's short-term short-selling of 20 billion yuan, the Ministry of Railways has totaled 105 billion yuan in the bond market.

In the past 11 years, the Ministry of Railways has been relying heavily on bank loans and bond financing. In recent years, the construction boom of the high-speed rail network has consumed a lot of liquidity.

According to statistics, China's railway fixed asset investment reached 842.7 billion yuan last year, an increase of 19.6% year-on-year, and its growth rate has fallen by nearly half; in the first five months of this year, the growth rate of railway infrastructure investment and fixed asset investment also began to decline. CITIC Securities analyst Zhang Hongbo believes that this means that last year may be the peak of railway investment. Although the growth rate will decline in the future, the scale of investment will remain high.

"In 2011, the scale of investment determined by the Ministry of Railways still reached 475.5 billion yuan, of which 600 billion yuan was for infrastructure investment." Zhang Hongbo said, "The high-speed railway needs a lot of investment." He expects that with the increase in demolition costs and construction costs, "twelve During the period of "V", the average annual investment in the high-speed rail still needs to invest 300 billion yuan.

Short-term debt solvency is questioned At this year's two sessions, the Ministry of Railways Minister Sheng Guangzu disclosed that the Ministry of Railways had a debt of RMB 1.8 trillion, and said that it was “tolerable” because the debt ratio was about 56%, which was “normally controllable” compared with industrial enterprises. Level".

However, the financial statements reveal another scene: As of the end of 2010, the Ministry of Railways had a total of 294.9 billion yuan in liquidity assets, a total of 581.2 billion yuan in current liabilities, and the current ratio was only 0.5, which was much lower than that of general industrial enterprises. Analysis of the industry, the reason may be the term "mismatched" to support the long-term construction of short-term debt, short-term solvency.

The cash flow is also very tense: In 2010, the Ministry of Railways required Rmb150bn for its debt service, but its operating cash flow was only recorded at Rmb160bn, and the booked cash was only Rmb95bn, which basically relied on loans to maintain operations. In 2005, in the column of liabilities of the Ministry of Railways's financial statements, the proportion of domestic loans and bond financing was only 28.9%. In 2008, the construction of high-speed railways was fully rolled out, and with the stimulus of 4 trillion yuan, the proportion quickly climbed to 75. %.

According to the "Funding Statement" issued by the Ministry of Railways, from 2008 to 2010, its asset-liability ratio rose from 46.81% to 58.24%; CITIC Securities Zhang Hongbo estimates that if the Ministry of Railways still rely on interest-bearing bond financing in the future, by 2015 At the end of the year, its total debt may reach 4.68 trillion yuan, and the debt to assets ratio will reach 72%.

The need to broaden the financing channels in the future As the high-speed rail has not reached the "harvest period" and is subject to the control of tariffs, the Ministry of Railways' profitability is not ideal. In the past three years, its ROE was -1.31%, 0.24% and 0.00 respectively. Last year, the financial report recorded that its net profit was only 15 million yuan, which was one ten-thousandth of the amount of debt-servicing.

CITIC Securities Zhang Hongbo believes that it is very difficult for the Ministry of Railways to continue to rely on debt financing. First, after the Ministry of Railways' debt ratio exceeded 70% in 2015, the National Development and Reform Commission prescribed a minimum capital of 25% for railway projects. The ceiling is close. Second, this year's credit policy is tight, and railway loans have caused banks and the community to pay attention. Credit financing will be difficult; in the end, the balance of railway construction bonds and medium-term notes must not exceed 40% of their net assets. In February this year, the ratio had reached 36.8%. Unless large-scale capital injections are made in the future, bonds can continue to be issued.

Zhang Hongbo expects that the railway will change direction in the future, and will be financed more through IPO and asset injection.

"The Beijing-Shanghai high-speed railway has a relatively large proportion of social capital. It may be the first to finance through IPO; if the IPO is successful, other profitable high-speed rail assets such as Beijing-Tianjin, Wuhan-Guangzhou, etc. may be gradually securitized in the future."