On The Two Day, The Market Value Shrank By Billions Of &Nbsp; &Nbsp; Lining Launched The "Winter Defense War".

　 Lining (China) Sports Goods Co., Ltd. (.HK) is entering a "field". Winter defense "

The damage was announced on Friday, the two quarter of 2011, the first two days of the week. Lining stock price Fell sharply. In December 20th, Lining's share price fell nearly 16%. On the 21 day, Lining's share price also failed to stop. Down market It fell 5.26% again, and the market value evaporated HK $4 billion 500 million for two days.

In December 22nd, Lining's stock price rebounded 2.48% to HK $17.36, but the "panic" sentiment continued to spread.

"Companies rely too heavily on distributors to open stores to drive growth." In response to this incident, Li Ning Co staff explained this. Guo Jianxin, chief operating officer of Li Ning Co, believes that "sports goods companies rely on new businesses to increase their performance and have already touched the ceiling."

As of late December 22nd, our reporter was still unable to learn whether there was any malignant incident behind the above analysis. However, before Li Ning Co's share price plummeted, Lining, who wanted to shell out 08032.HK, revealed that the HKPC's GEM Listing Committee had ruled that the extraordinary Chinese takeover of Lining was about 30% stake in anti takeover spanactions.

According to the Listing Rules of the Hongkong stock exchange, the so-called "anti takeover action" usually refers to a spanaction that may affect the company's control rights, or in disguised form the spanaction of assets to be listed.

A spokesman for the special China company said, "the company has ruled on the HKEx ruling that the acquisition of Lining by China is an anti takeover appeal. The company is still confident of the eventual completion of the purchase. The timetable for appeal will depend on the date of hearing of the stock exchange. "

Institutions sing empty

According to the information released by Li Ning Co, the order of Lining products will end in the second quarter of fiscal year 2011. The total value of orders calculated according to the retail tag price is equivalent to that of the same period in 2010, of which the average retail price of clothing and footwear products has risen by more than 8%, but the number of orders has decreased by more than 7% and 8% respectively. Due to the adjustment of wholesale discounts to dealers, the total value of orders decreased by about 6% compared with that of wholesale shipments, and the order volume also declined.

After the Li Ning Co sent the above news, a number of agencies expressed their attitude toward Lining, which subsequently led to a continuous fall in Lining's share price, and the total value of the two trading days evaporated 4 billion 500 million Hong Kong dollars.

Construction Bank International released research report that Lining recorded sporting goods clothing enterprises in the second quarter of 2011, the worst record of orders, the growth rate of orders is larger than the market expectations, maintaining a weaker market rating, and the target price from the original 21.9 Hong Kong dollars to 15.2 Hong Kong dollars.

Jiayin International believes that the order volume of Li Ning Co's second quarter order will decrease by about 6%, representing the weakest among the sporting goods stocks. It is expected that the market share will decline in the market competition, and the outlook for the next two quarter will be weak. Jiayin international therefore lowered its Li Ning Co earnings forecast 16%-19% in fiscal year 2011-2012.

In addition, Deutsche Bank and other agencies also published research reports expressing disappointment at Li Ning Co's performance.

In response to the reaction of the capital market, Li Ning Co spokesman said, "share price performance is the behavior of the market, and we will continue to do business well." {page_break}

Channel difficulty

But the disappointment of the market has also made Li Ning Co reconsider its traditional distribution channels.

Li Ning Co spokesman said Li Ning Co currently has 129 distributors and more than 2000 distributors. Most distributors are relatively small in scale and operate 2 stores on average. In fact, more than 1700 distributors operate only 1 stores.

Behind this "small and scattered" distribution team, it is uneven management capabilities. "We note that most retailers' retail management capabilities, procurement capabilities and product lifecycle management are relatively weak, resulting in their single store efficiency and operating margin are not ideal, and they lack the scale effect of the number of stores." The spokesman said.

In addition, with the rapid change of the sporting goods market and the continuous urbanization of the country, sports products are becoming consumption upgrading, and there is a higher level of demand for products and brands. At the same time, distributors and distributors are facing the pressure of rapid cost rise, especially labor costs and rent increases.

For the decline in the number of orders, industry veteran Wang Yiming said, "unlike Anta sports and other competitors, Lining has been stuck in the past few years in the integration of channels, making Lining as a relatively old brand, with multiple brand agent agents, there is not much room for improving sales volume."

Misfortunes never come alone. In the face of the dilemma of the channel, Li Ning Co's efforts to get involved in sports real estate have also been hit hard. Special China announced recently that the Hongkong stock exchange's gem listing committee ruled that the extraordinary Chinese acquisition of Lining's equity spanaction was anti takeover.

Lining, the predecessor of the extraordinary China, was pleased to save energy by Hongkong gem. At the end of August, it announced the acquisition of a 30.9% stake in the company and was renamed the "special China Holding Limited". Subsequently, the extraordinary China bought the Invest-holding Company Bright Equal and Union Wealth at a total price of HK $700 million. This makes the extraordinary China have the right to develop and manage the industrial parks built on the land in the development zone and to develop chessboard hill land. Lining company is involved in sports real estate.

The strike was halted. A special Chinese company spokesman said: "the intention of the extraordinary China is to continue acquisitions under the Listing Rules of the gem, and to establish strategic cooperation with Lining to enhance sports related businesses, and to establish sports talents and competitions, production and management of sports activities and sports and green community businesses, so as to develop the extraordinary China into a leading sports and environmental protection complex in the mainland."

"Winter defense"

Faced with the current situation, Li Ningzheng launched a "winter defense war".

"The key to future development is to increase the efficiency of existing stores," Li Ning Co spokesman said. "We should face up to problems early and take the initiative to reform their distribution system, including integrating low efficiency distributors, improving store structure, enhancing product lifecycle management, and increasing discount rates to dealers. The aim is to solve the challenges faced by the retail sector."

In fact, Li Ning Co has launched a reform measure aimed at improving channel efficiency. The important thing is, "through the acquisition of more efficient distributors or distributors who want further development, we will also encourage large dealers to increase the number of direct outlets."

According to our correspondent, the Li Ning Co will integrate more than 2000 distributors in the future, and 500-600 distributors will be eliminated from Lining's distribution system. As of June 30th this year, the number of Li Ning Co's stores was 7478.