How much impact will the break in HNA’s capital chain have on HNA Group’s debt ratio?

The debt ratio increased significantly.

In the domestic business field, HNA uses a high-risk plan, and HNA has participated in numerous mergers and acquisitions, involving many industries including fast-moving sales, retail, real estate, financial services, etc. Among the long list of scandal targets, well-known companies such as Shanghai Jahwa and Greentown have appeared. Development appears to be steady and rapid.

However, HNA’s capital chain, which is constantly attacking, is not abundant and can even be called tight. The strategy of HNA Group is to grow bigger first and then become stronger, integrating industry and finance. The less abundant the funds, the more it needs to operate through frequent transactions. HNA has formed a "high debt ratio" operation mode.

Public information shows that HNA Group’s asset-liability ratio has increased every year, from 2006 to 2010, which were 56.79%, 57.13%, 67.59%, 75.01% and 75.75% respectively. "First expand, then raise funds through equity pledges of listed companies and allocate funds from listed companies, and then expand further." This has become HNA Group's capital transfer path.

Once the capital chain breaks, the consequences will be disastrous. The expansion method of using debt as financial leverage like HNA Group is very risky in today's tight financing environment. As long as one part goes wrong, , it will be like a chain reaction, and other links will also be affected. It may slowly collapse one by one, funds will not make ends meet, and the debt ratio will reach an alarming level.

The possibility of boosting the shipping business in the next two years is low. Once HNA's GESEACO plan falls into sustained losses, it will affect HNA's further capital operations, leading to an increase in corporate debt ratios and increased operating risks.

It can be said that HNA is in a precarious stage of its capital chain. Just like its name, it is sailing in the sea. If it can overcome this hurdle, HNA's capital chain will be more stable, its debt ratio will be reduced, and its business will be more stable. , if this hurdle is not passed, the capital chain may really break. In this case, the debt ratio will inevitably be frighteningly high, and HNA will definitely abandon part of its business, and may never return to its original height.