High-yield forest credit risk (on)

Risk Analysis: Comparative Analysis of General Benefits It is understood that the internal rate of return of fast-growing and high-yield forests is usually around 10%. In countries where plantation forests are successful, such as New Zealand, the internal rate of return of commercial forests can reach 13% to 14%. The New Zealand UBS Fund and the United States Huihao Company believe that investing in forestry in New Zealand is a high-yield, low-risk industry. The internal operating rate of timber operations in China, such as the Guangdong Zhanjiang Leizhou Forestry Bureau and the Hainan Provincial Forestry Corporation, is mainly related to the export of wood chips. The internal rate of return is about 10%. With the continuous deepening of the reform of China's forestry system and the successive implementation of various supporting policies, the internal rate of return of investment forestry in China will also increase.
Analysis of Credit Structure: Credit Structure of Borrowers Currently, the corporate nature of bank loan projects mainly includes three types: one is a wholly state-owned company, one is a domestic listed company, and the other is an overseas listed multinational corporation. Borrowing units are basically enterprises with certain influence in the industry, among which the traditional state-owned forest management companies have advanced forestry technology and can enjoy various preferential policies for the forestry system, and their operations are relatively stable; downstream processing enterprises such as Fujian Nan Paper Co., Ltd. It is one of the top nine newsprint paper mills in the country. It has the most advanced paper machines in the world and its market performance is good. It has certain experience in self-owned raw material forest bases; multinational corporations such as APP are overseas listed companies listed on the New York Stock Exchange. Raising funds from the international capital market, but because its investment strategy is not sound enough, capital expansion is excessively fast, debt is too high and the debt structure is unreasonable, profitability declines with the rapid expansion of assets, leading to a credit crisis that threatens domestic companies. Construction progress and normal operation.
From the lesson of the Hainan Jinguang Project, it is necessary to conduct in-depth research and analysis on the solvency of international multinational corporations, their main business operational capabilities, and the performance of their capital markets, in order to track the credit structure of international capital market borrowers and reduce credit risks.
The government's credit structure for fast-growing forest projects should select key projects in key areas, with strong government support and a clear driving role for local economic development. It is entirely feasible for large-scale leading enterprises that support forestry-paper integration and forest-plate integration to receive support from governments at all levels in the implementation of forest land, prioritization of logging target plans, and reduction of irrational taxes and fees. At the same time, it should actively strive for the support of state capital injection and financial discounts.
The development of market-credit fast-growing forest loan projects should pay close attention to listed companies and companies that are preparing for restructuring and listing. Such projects have higher financial transparency and better market credit structure, such as Fujian Yongan Forestry Company and Fujian Nan Paper Co., Ltd. However, the capital market is a double-edged sword. On the one hand, it may be able to raise funds quickly. On the other hand, there are problems with market reactions. Taking the Hainan Jinhua Forestry Project as an example, the stock price of the New York Stock Exchange fell sharply due to the unstable political situation in Indonesia, the setback of new bonds issued by APP and the credit crisis. The Bank's review project should strengthen information communication between departments such as assessment, market, finance, credit, branches, and law, coordinate with each other, identify problems in a timely manner, and reduce losses. It must have strong project tracking capabilities and establish a sound mechanism. Monitoring and rapid response mechanisms.
Status of guarantee Currently, fast-growing forest loan projects use third-party guaranteed guarantees. Listed companies usually hold mutual guarantees with other listed companies and equity pledge guarantees. Some of them use forestry assets to guarantee mortgages, and APP uses internal guarantees. On the whole, the Group's internal guarantees should focus on analyzing its parent company's business risks. The actual progress of the project itself is also basically smooth. The guarantee company has a good business operation, but the problem lies with the parent company. All of its assets are It may be involved in a debt crisis. In the future, this type of group internal guarantee should not only examine the credit status of the guarantor, but more importantly, examine the financial status of the parent company. The financial status of international multinational corporations should take the initiative to consult with the authority of the foreign forestry paper industry to improve the level of risk analysis.
The main difficulty in the financing process: capital issues As can be seen from the above several projects, the domestic afforestation project is of a small scale. The main problem is that the capital is insufficient and the project is difficult to scale up. This is also a common problem faced by most forestry companies today. . Analysing the reasons, the development of forestry is a large industry cycle, and the demand for funds is large. On the one hand, the restructuring of leading companies such as paper companies requires a large amount of investment in fixed assets. On the other hand, the construction of fast-growing and high-yielding raw material forest bases also requires a large amount of capital investment. There is a general shortage of capital funds in the adding companies. When the development bank supports this type of project, it should pay attention to combining traditional credit services with the cultivation of the capital market, and strengthen the company's ability to raise capital.
According to “Some Opinions on Accelerating the Construction of Raw Material Forest Base in Paper Industry”, the state will invest a certain percentage of capital to support the papermaking industry raw material forest base. If this policy can be implemented in the near future, the risk of supporting fast-growing and high-yielding forests will be greatly reduced, and capital issues will be reduced. It is expected to make a breakthrough in the short term.
Inadequate guarantee capacity Forest-paper and forest-plate integration project has huge investment, and the capital demand often reaches several billions or even billions, plus the forestry is the ecological benefit spillover, and the weaker industries with comparatively lower returns have low profitability. Long-term risks are large, so it is difficult to find suitable guarantee units. (To be continued)