Nowadays, if you say "Brilliance" alone, many people will feel unfamiliar, but when put together with BMW - "BMW Brilliance", it seems so familiar. This situation somewhat reflects the embarrassment of Brilliance Group in the hearts of users

situation.

This month, Brilliance Group defaulted on its debt.

Just last week, Brilliance Group's 1 billion yuan private placement bond "17 Huaqi 05" expired, and its issuer, Brilliance Automobile, failed to pay on time, resulting in a substantial default.

According to relevant rules, all bonds owned by Brilliance will be suspended from trading.

This is Brilliance Group's first default in the public bond market.

Since then, Brilliance Group responded that the company is still working hard to raise funds, but the company's current liquidity is tight, funds are facing greater difficulties, and there is significant uncertainty as to whether it can raise sufficient funds in time.

▍"Tip of the iceberg" In fact, this is not the first time Brilliance Auto has faced a debt crisis this year.

Since July this year, Brilliance Group has been involved in a debt crisis.

On August 12, many Brilliance Group bonds including 19 Huaqi 01, 18 Huaqi 01, 18 Huaqi 02, and 18 Huaqi 03 fell sharply, with 18 Huaqi 01 falling by more than 19%.

On August 13, the share price of Brilliance China, a subsidiary of Brilliance Group, fell, falling 8.78% throughout the day.

The simultaneous decline of Brilliance Group's bonds and stocks also reflected, to some extent, investors' concerns about Brilliance Group's debt problems at the time.

Industry insiders said, "For Brilliance, this is the first domino to fall." With the default of this 1 billion yuan bond, the tip of the iceberg of Brilliance Group's debt pressure has also been slowly revealed.

This was followed by negative outlooks from rating agencies.

In August, rating agencies Dagong International and Oriental Jincheng successively included Brilliance Group and several bonds on their rating watch list; in September, Oriental Jincheng and Dagong International lowered their credit ratings of Brilliance Group entities; in October, Oriental Jincheng

Jincheng and Dagong International once again lowered their ratings on Brilliance Group. Among them, Oriental Jincheng lowered Brilliance Group's bond rating from AAA at the beginning of the year to BBB.

According to incomplete statistics, except for "17 Huaqi 05", there are currently 14 existing bonds of Brilliance Group, with an existing scale of more than 16 billion yuan, and the redemption period is mainly concentrated in 2022, all of which have default risks.

In fact, for Brilliance Group in 2020, in addition to the impact of the new crown epidemic, a debt "explosion" is also expected.

According to the Oriental Jincheng rating report, as of the end of 2019, Brilliance Group's total debt was 645.549 billion yuan, of which short-term interest-bearing debt was 47.887 billion yuan, accounting for 73.06%; and from the perspective of the term structure, as of April to the end of December 2020,

The scale of Brilliance Group's interest-bearing debt is 43.267 billion yuan, accounting for 63.87% of all interest-bearing debt. The proportion is very high, and the debt repayment pressure has increased sharply.

▍"Two levels of differentiation" Fixed-income analysts from GF Securities said that the main reason for Brilliance Auto's default was the weak profitability of its own brands and its heavy reliance on BMW Brilliance for profitability. The upcoming divestment of BMW Brilliance will have an impact on the company's refinancing ability.

According to Qichacha, the registered capital of Brilliance Auto Group Holdings Co., Ltd. (ie Brilliance Group) is 800 million yuan, 80% and 20% of which are held by the Liaoning Provincial State-owned Assets Supervision and Administration Commission and the Liaoning Provincial Social Security Fund respectively. The actual controller is the Liaoning Provincial State-owned Assets Supervision and Administration Commission.

The headquarters is located in Shenyang.

The company owns four listed companies, namely Brilliance China Automotive Holdings Co., Ltd. (Brilliance China), Shanghai Shenhua Holdings Co., Ltd. (Shenhua Holdings), Jinbei Automobile Co., Ltd. (Jinbei Automobile) and Xinchen China Dynamics Holdings

Co., Ltd. (Xinchen Power).

From the perspective of business system, Brilliance China carries the vehicle production, research and development and other businesses of the five major brands of Brilliance Group: Zhonghua, Jinbei, Huasong, Renault and BMW Brilliance.

Among them, BMW Brilliance is a joint venture between Brilliance China and BMW, with Brilliance China holding 50% of the shares.

What is surprising is that in recent years, the two major sectors of Brilliance Group, the joint venture and the independent sector, have seen a trend of two-level differentiation - the sector dominated by the joint venture with BMW Brilliance is booming, while the sector dominated by the independent sector, dominated by China, Jinbei and Huasong, is declining.

It's getting worse.

Brilliance China's financial report shows that in the first half of 2020, Brilliance China's revenue was 1.45 billion yuan and net profit was 4.025 billion yuan.

However, excluding the 4.383 billion yuan net profit contributed by BMW Brilliance, this means that Brilliance China's other segments lost more than 340 million yuan.

Data shows that BMW Brilliance contributed a net profit of 7.626 billion yuan in 2019 and a net profit of 6.244 billion yuan in 2018. During the same period, Brilliance China achieved a net profit of 6.292 billion yuan in 2019 and a net profit of 5.294 billion yuan in 2018. In proportion, BMW Brilliance’s profit

The contribution rates are all over 100% and are on the rise.

In terms of sales, data from the Passenger Car Association shows that in the first half of this year, Brilliance China sold only 3,186 vehicles and Jinbei Cars sold 7,661 vehicles. Compared with BMW Brilliance's sales of 262,000 vehicles in the same period, these are barely worth mentioning.

In fact, except for the joint venture segment BMW Brilliance, whose sales are on the rise, the sales of the other three major independent brands, Zhonghua, Huasong and Jinbei, have continued to decline and have even been marginalized by the market.