Can Lining'S Share Price Plunge To Wake Up The "Dream Man"?

December 29th, last week's Western Christmas is business and business.

Direct cause: order quantity decline, operation acquisition failure

In the first two trading days of last week, Li Ning Co experienced a big drop in the warehouse style. Following the sharp drop of 15.86% in December 20th, Lining fell 5.26% again in the market the next day, with a total decline of 21.88% on the two day.

The direct reason for the sharp plunge in its share price is the decline in orders in the second quarter of 2011 and the failure of the extraordinary China to acquire Lining 30% stake.

Last week, Lining announced the second quarter of the 2011 fiscal year, the second quarter of Lining products orders. The total value of orders calculated according to the retail tag price is similar to that of the same period last year. The average retail prices of clothing and footwear products rose by more than 8%, but the number of orders decreased by more than 7% and 8% respectively. Considering the group's adjustment to wholesale discounts, the total value of orders fell by about 6% compared with the same period last year.

Just after the release of the data, Lining's share price was washed away for two consecutive days.

Li Ning Co's order will be the first decline since 2008. The number of clothing and footwear products in the first quarter of 2011 will increase by 5% and 1% respectively.

With the collapse of Lining's share price, Morgan, JP, Goldman Sachs and Jiayin and other domestic and foreign brokerages also immediately unanimously sing to them.

On the one hand, the market value has shrunk, and the other side is a big understated value of the institution. It is called a common saying that "housing leakage is a rainy night".

Antecedents: backdoor entry into the real estate industry

In addition to the second quarter decline in orders, another reason for investors' lack of confidence in Lining is on the 17 th of this month. The extraordinary China held by Lining Brothers announced a notice on acquiring the listed company Lining.

The announcement indicated that the Hongkong stock exchange ruled that the takeover would constitute an anti takeover under the GEM Listing Rules, that is, the approval process of IPO, which meant that the deal was almost finished.

Market participants pointed out that if the appeal of the extraordinary China was dismissed, it might mean that Lining's plan to build a sports real estate industry by special China was defeated.

At the beginning of April this year, Lining brothers won the Hongkong GEM listed company with HK $700 million in cash - over 80% of the extraordinary China. Extraordinary China became another capital operation platform outside Li Ning Co.

In August 31st, Lining announced that it would like to invest about 31% of its Li Ning Co stake in the extraordinary China. After the announcement, extraordinary China's stock price jumped to a higher level and reached a record high of HK $0.98.

In December 17th, after the announcement made up three trading days before and after anti takeover, China's stock price fell 33%, and its stock price closed at HK $0.315 in December 20th.

In just three and a half months, the stock price has fallen by 60%, the market value has evaporated nearly 7 billion 100 million Hong Kong dollars, and investors have suffered heavy losses.

Extraordinary China said in its announcement that it had appealed, and the company would continue to promote acquisitions under the Listing Rules of the gem.

According to the Hongkong listing rules, two of the listed companies have the opportunity to appeal after the HKEx regards the anti takeover as an anti takeover. Although the extraordinary China has indicated that it will appeal, there is little chance of such a successful case reversal in practice.

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Compared with Lining's second quarter orders in 2011, all of its domestic competitors, several major sports brands from Quanzhou, showed an upward trend.

The second quarter data released by Anta Sports Products Limited in November showed that the order amount increased by 21% over the same period last year, of which the proportion of footwear and accessories was similar to that of the same period last year.

Anta reported that the volume of orders and average selling price were ideal growth.

By the end of the third quarter of 2010, the total number of Anta shops increased by 197 to 7249 in the quarter, and Anta predicted that the total number of stores by the end of 2010 would reach 7400 targets.

Increasing network penetration will help to increase company turnover.

XTEP (China) Limited also announced in October that the order volume increased by 25% in the second quarter of 2011.

Among them, the average selling price of clothing products increased by double digits, while the average selling price of footwear products also increased.

According to its announcement, it is believed that the compound growth rate of the group over the next three years will remain above 20%.

The orders for the first quarter and second quarter of October, released by Peak Sport Products Co Limited in 2011, showed an ideal growth of 25% and 24% respectively over the same period in 2010.

The announcement also noted that the third quarter ended September 30, 2010 was 13% higher than the same period last year.

361 degree sporting goods Co., Ltd. announced that the spring and summer products distributors' order meeting was held in 2011. The total amount of orders increased by 20% compared with the same period last year. The number of shoes and clothing products increased by 15% and 11% respectively.

For the good situation of Quanzhou sports brand's order next year, Deutsche Bank released a research report, and gave good expectations to these brands.

Deutsche Bank reported that the outlook for sporting goods brand stocks in the mainland is more prudent, but it is optimistic about the prospect of sports brand distributors in the mainland. Therefore, it is recommended to sell Lining and buy Anta and BELLE.

The report points out that it is expected that the mainland's sporting goods sector will expand as a new profit growth model next year, mainly due to the increase in costs and discounts, which will hurt the profits of the shops. It is expected that the growth of Lining and China's retail sales will make the market disappointed. But Anta and XTEP, 361 degree and PEAK will be stronger than market expectations.

Revelation: do not look at the number of stores to see "single store performance"

For the reason of Lining's declining orders in the two quarter of next year, Li Ning Co CEO Zhang Zhiyong explained to the outside world: "sports goods retail market is facing heavy pressure.

On the one hand, the growth mode of relying on a large number of new stores has been difficult to sustain. On the other hand, the cost of operating terminal retail stores is increasing, which makes Li Ning Co dealers more cautious about the growth prospects of the next year.

According to the relevant data, at present, the number of Lining brand stores is 7478, which is the first domestic sports brand to break through 7000 stores.

Under the pressure of rising labor costs and rental costs, Zhang Zhiyong believes that a large number of shop strategies are facing "ceiling", and sporting goods companies must enhance the efficiency of existing stores.

Analysts in the industry pointed out that Lining stores have a large number of similar sports brands. Closing stores may be a reflection of Li Ning Co's expansion and expansion.

The personage also thinks that the decline of Lining's share price is affected by the decrease in the order amount. The market is worried that sports goods enterprises have already met the "ceiling" relying on the new store's thickening performance. Li Ning Co and other domestic sports brands have been pursuing many years of growth.

At present, there are more than 7000 sports brands in China besides Lining. The brand names of several sports brands mentioned above mentioned in this article will also exceed 7000 stores in Quanzhou this year.

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This year's sports brand annual report data show that at present, several major sports brands in Quanzhou have broken through 7000 stores during the year and will be fully realized.

The relevant agencies are also forecasting that from the current speed of development, in the next three years, the four enterprises of the Quanzhou sports brand camp will have more than 1 stores on their own terminals.

Anta is the first to break through 7000 brands of stores. The company's mid year report shows that the number of stores nationwide has increased from 6591 at the end of 2009 to 7052, with a net increase of 461.

The total number of XTEP brand retail stores reached 6579, a net increase of 476, exceeding the target set by 6500 at the beginning of the year.

According to the plan mentioned in its report, in the second half of this year, XTEP will concentrate on adding 800 to 1000 brand retail stores, and plans to increase the number of XTEP brand retail stores and flagship stores to about 7000 and 40 by the end of the year.

The 361 annual report shows that the number of stores in the country has reached 6927, and over 7000 in the year are no problem at all.

The source also revealed that 361 degrees had been proposed, plans to expand the number of stores to 10000 in 4 years.

The growth rate of PEAK sports stores is closely following the three brands mentioned above. The company's mid year report shows that PEAK sports stores have 6796 stores, a net increase of 590 compared with the end of 2009, while the company plans to increase 1000 PEAK authorized retail outlets by the end of 2010.

Just as many sports brands have broken through 7000 stores, Lining's decline in orders in the second quarter of next year sparked the opening of stores to the market.

In view of this, Luo Shijin, a consultant in Shanghai's public relations agency who has long been observing the sporting goods market in China, believes that the main reason for the decline of Lining's stock price is, on the one hand, from Lining's diversified operation (investment in sports real estate), with uncertain prospects and no investor's permission. On the other hand, investors' confidence in Lining's growth slowed down.

The latter will also affect investors' confidence in the sporting goods industry and bring more pressure on the future two or three line brands to visit the capital market.

As to whether the scale of the 7000 stores is saturated for the sports brand, Luo Shi Jin believes that there are some differences between Lining's market and the main market of Quanzhou's sports brands.

Compared to Lining's main domestic and second tier market, Quanzhou market is not completely saturated with the two or three brands of major cities in the market. However, the growth of the industry will tend to be slow, but it is an indisputable fact.

He reminded Lining that this crisis is a good warning for Quanzhou's sports brand. After years of market enclosure campaign, the marketing focus of Quanzhou brand should be shifted from the number of stores that only originally pursued to stores to the improvement of single store performance.

He believes that China's sporting goods market is shifting from the previous era of horse racing to intensive farming. It is imperative to enhance the profitability of terminal stores.

Zhang Tao, vice president of Anta company, told reporters in the morning post that thanks to the great potential of the two or three line market, the number of Anta's stores will continue to grow after breaking through the "7000 store" gateway.

"We are always facing the most extensive population in China.

We have a large base and a wide range of people, which means that we need more stores to serve our customers.

He said.