Lining Market Value Of Shoe Enterprises Evaporated 5 Billion &Nbsp; What Is The Market Situation?

In December 20, 2010,

Meanwhile, Li Ning Co announced the integration of stores, but was interpreted by the outside world as a signal to close stores.

Under the attack of institutional abandonment and investment banking, Li Ning Co has yet to offer effective prescriptions to restore market confidence.

But seen by Li Ning Co as a low end market competitor.

What is the real market situation of Li Ning Co?

Market value evaporation

Li Ning Co's 2010 China Daily reported that the company's revenue in the first half of the year was 4 billion 500 million yuan, an increase of 11.2% over the same period last year.

In the first quarter of 2011, the company's first quarter of the Lining brand dealer order, the company's performance is still in growth: the amount of orders calculated according to the retail tag price increased 12% compared with the same period of the previous year, of which the average retail price of shoe products rose by more than 7%, the order quantity increased by over 5%, the average retail price of clothing products rose by 11%, and the quantity of order increased by 1%.

The crazy fall of Li Ning Co stock market value came from the disclosure of two news in December 17, 2010: first, Li Ning Co published the results of the Lining brand product order in the second quarter of 2011: the amount of orders calculated according to the retail tag price was flat with the same period of last year, of which the average retail price of clothing and shoes increased by more than 8%, but the number of orders dropped by 7% and 8% respectively.

Because Li Ning Co increased the wholesale discount rate to dealers by 1-3 percentage points in 2011, the order amount was calculated by wholesale shipments, representing a decrease of about 6% compared with the same period last year.

Two, the HKEx announced that the extraordinary China (market, information, commentary) wanted to acquire a 30.9% stake in Li Ning Co and was ruled out as an anti takeover paction, so it was not approved.

In December 20, 2010, at the end of the opening of the HKEx, Li Ning Co's share price fell sharply with the large volume of institutional clearance.

The lowest value to HK $16.6 was the lowest since May 2009.

JP Morgan and Merrill Lynch subsequently lowered the target price of Lining valuation. Deutsche Bank also lowered its target price by 39.8% to HK $14.68, and investment rating was lowered from holding to selling.

Goldman told our correspondent that they have adjusted the Li Ning Co rating to neutral.

Huashan Research Institute in early December 2010 also decided: "although Lining's reputation in the Chinese sportswear industry is very loud, considering the uncertainty involved in the restructuring of the distribution channels and the impact of the increase in the wholesale discount rate, we decided to reduce the rating from buying to wait-and-see."

Why does the number of orders decline year by year? Why is there such a big impact? Yao Haoran, CO director of asset management at the time, thinks that Li Ning Co has a high valuation at present, and only high growth can support its stock price. However, the backlog of order rate will bring pressure to the stock price, so it is not recommended that investors invest in Lining's stock in the near future.

And the reform of the distribution system is also the basis for Li Ning Co to be short of investment banks recently.

By the end of June 2010, Li Ning Co had 129 distributors and more than 2000 distributors.

Among them, more than 1700 distributors operate only one store.

The low efficiency and profit margins of the stores, as well as the increase in labor costs and rents, have led the Li Ning Co to announce the integration of its five hundred or six hundred outlets with poor profitability.

The change directly brought about a decline in orders in the second quarter of 2011.

According to Kai Chi securities, sales and earnings of Li Ning Co in the 2011 fiscal year are expected to face downside risks.

Sports property blocked

"Li Ning Co and 8032.hk are not directly related."

A head of Goldman Sachs said.

However, the 30.9% stake in the acquisition of Li Ning Co by the HKSAR was judged by the Hong Kong Stock Exchange as an anti takeover paction, or it became another huge bad news for Li Ning Co.

Some analysts said that the ruling resulted in Li Ning Co's failure to enter sports real estate.

Li Ning Co spokesman in an interview with our reporter, Li Ning Co and extraordinary China are two companies run by different management companies, Li Ning Co will continue to maintain professionalism, continue to develop sports footwear, clothing, accessories and equipment products business.

For the Li Ning Co to interpret the outside world to enter the sports real estate, "or to the extraordinary China response."

The predecessor of the extraordinary China is the Hong Kong stock market gem, which is energy saving.

In April of this year, Lining and his brother Li Jin spent 700 million yuan to subscribe for 400 million yuan preferred stock and 300 million yuan convertible stock notes, respectively, and obtained the "shell" from Yu Ming's founder Feng Yongxiang and Feng Yaohui.

It is reported that at the beginning of Li Ning Co's management, investors were reassured by investors that the two companies had a clear division of labor and would not be involved in sporting goods business.

As an enterprise that has been losing money on the growth enterprise market, how to make investors feel confident in how to save energy effectively? Lining chose an operation channel with left hand to right hand: at the end of August 2010, Lining and Li Jin brothers sold the 30.9% stake in Li Ning Co to express energy saving.

Nevertheless, even though extraordinary China will have to raise funds in the future, or Lining will reduce its cash holdings, Lining will still have plenty of room to maintain his status as a single largest shareholder in the extraordinary China and Li Ning Co.

After the acquisition, the extraordinary China is a sports real estate company. It has the right to develop and manage the land of industrial parks and chesspan mountain in the Shenyang Development Zone, including the development of eco city.

The eco city project is located in the center of Shenyang, with an area of more than 1500 mu, involving an investment of about 40 billion yuan. The investment period is expected to be 5 to 8 years.

After such a move, the market value of the extraordinary China was as high as 7 billion 900 million Hong Kong dollars.

According to the analysis, Li Ning Co, which is invested by the extraordinary China, helps Li Ning Co to enter into sports real estate.

However, a Hong Kong stock analyst who did not want to be named revealed that the acquisition of Li Ning Co shares by China was controversial from the very beginning.

HKEx recently ruled that the acquisition of Li Ning Co by China is an anti takeover operation.

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

Insiders explained that the rules did not specifically define the difference between capital injection and acquisition and shell buying. When evaluating a paction, the Committee focused on the intention of the paction. If the company's explanation could not make the Committee accept the motive to inject or purchase assets, and the paction would make significant changes to the company (such as the impact of control or main business pformation), the committee might consider the paction as "anti takeover".

Although Chen Ning, executive director of extraordinary China, still said that the company would appeal against the ruling, capital markets generally agreed that its success was unlikely because the HKEx's anti takeover rulings were rarely precedent.

The loss of the extraordinary China for three consecutive years has also blocked the way to continue acquisitions through the listing of new shares.

"This news has affected the valuation of Li Ning Co."

The Hong Kong stock analysts said.

Wolves are waiting.

In fact, the trouble of Li Ning Co is much more than the decline of orders and the setback of sports real estate. It also faces enormous pressure from peer challenges.

"Our company's profit and market share is higher than Lining's.

I didn't think of Lining as our competitor and we would not make progress if he was our competitor. "

Anta sports (quotes, information, commentary) Co., Ltd. (Anta) board chairman and CEO Ding Shizhong said.

Previously, Anta was only a competitor in the low-end market of Li Ning Co.

But Fujian, Jinjiang sporting goods company, including Anta, XTEP and PEAK, has been listed, which has changed the competition pattern of the industry.

It is reported that as of 2010, Anta's number of stores has exceeded 7000.

The main competitive strategy of competitors is to open stores in two or three tier cities.

In fact, Li Ning Co's main market is also a provincial capital and prefecture level city. Up to June 30, 2010, more than 70% of the 229 new Li Ning Co stores were concentrated in the two or three tier cities in China.

But these cities are also beginning to attract Adidas's covetousness. Adidas also announced its plan for the next 5 years in November 2010, and plans to open 2500 stores in two or three cities.

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In the new competition pattern, the situation of Li Ning Co is becoming increasingly awkward.

Goldman Sachs said in a research report released in December 17th that Lining has highlighted two major weaknesses: first, brand risk.

Lining lacks a clear position between the global brand and the domestic popular brands.

Two, channel risk.

Li Ning Co uses multi brand dealers, which makes dealers unable to focus on promoting the Lining brand.

How can Li Ning Co cope with the wolves? Li Ning Co CEO Zhang Zhiyong admits that the growth mode of relying on a large number of new stores has been difficult to sustain.

"We must constantly upgrade our products and take the road of differentiation."

In August 2010, Lining changed the logo, and the slogan changed from "anything is possible" to "Make The Change".

Li Ning Co spokesman said that "the process of brand remolding can not be easily concluded in a few months."

HK $5 billion

In December 20, 2010, Li Ning Co's share price plummeted, and its market value shrank by nearly HK $5 billion in 10 days.

7%, 8%

In the second quarter of 2011, Lining clothing and shoes orders fell by more than 7% and 8% respectively.

30.9%

China's 30.9% stake in acquiring Li Ning Co is ruled out as an anti takeover paction.