YOUNGOR: Strengthening The Main Business And Diversifying And Expanding Simultaneously

YOUNGOR Group Limited company (hereinafter referred to as YOUNGOR, 600177), there are frequent movements and announcements, which will give the industry and investors the attention of the leading domestic clothing enterprises.

A notice is related to the strong clothing industry.
In June 21st, YOUNGOR announced that it would transfer all the shares of its new Malaysia clothing group (Hongkong) Co., Ltd. (hereinafter referred to as "Xin Ma clothing") to Sheng Tai yarn dyed fabric. If the net asset price of audit is below US $80 million, Sell The price is set at $80 million; if the net asset price of audit is above $80 million, the selling price is audited net asset value.
The remaining two announcements are related to investment in diversified industries.

In July 1st, YOUNGOR announced that it invested 112 million 424 thousand and 400 yuan to subscribe for 3 million 740 thousand shares of the zirconium industry's non-public offering at the price of 30.06 yuan / share. The total share capital of the Oriental zirconium industry after the issue of public offerings is 206 million 982 thousand yuan, while YOUNGOR accounts for 1.81%.

In July 6th, YOUNGOR issued a further announcement that it invested 120 million 300 thousand yuan to subscribe for 6 million shares of Xinjiang public and non-public offering at the price of 20.05 yuan / share, accounting for 1.46% of the total share capital of Xinjiang public and non-public offering shares. Investment The amount represents 0.86% of YOUNGOR's latest audited net assets.

The left hand insists on the main business of clothing industry and continues to grow bigger and stronger. The right hand continues to expand two sectors of real estate and financial investment, and seeks for multiple profit growth points. For China's clothing industry, the diversified development mode that YOUNGOR has implemented has the model significance to some extent.

Main business transformation from production management to brand operation.
The new Malaysia apparel is the wholly-owned subsidiary of YOUNGOR. It was three years ago. adopt An international merger that has stirred up the clothing industry has been incorporated into YOUNGOR.

Three years ago, in 2008, YOUNGOR announced in a high-profile announcement that it would spend 120 million yuan to acquire the 100% stake in XinMa (New MA) held by the US KWD group and the 100% stake in Smart owned by Kellwood Asia Limited, a wholly owned subsidiary of KWD.

The international acquisition of the leading domestic clothing enterprises at that time caused a great sensation in the industry and was endowed with the important significance of carrying out the internationalization strategy of the domestic clothing brand. {page_break}

KWD's Smart is a world-renowned clothing production, marketing and brand agency business. Core Company is a new Malaysia clothing company registered in Hongkong. Xin Ma group's core businesses include 14 production bases distributed in Sri Lanka, Philippines, Guangdong, Jilin, Shenzhen and other places. The group does the foundry business for more than 20 brands such as POLO and CalvinKlein, and also has five authorized licensing brands such as Nautica and PerryEllis.

At that time, YOUNGOR bought new horses for $70 million and $50 million respectively. clothing And new Malaysia international two enterprises. The acquisition of new horse clothing has greatly enhanced YOUNGOR's production capacity, and its annual production capacity can reach 80 million. The acquisition of Singapore is more valued by YOUNGOR, because it has a design team in Hongkong and has hundreds of department stores in the United States with sales channels and a stronger logistics system. This is the new horse costume.

YOUNGOR said that the sale of the new Malaysia clothing OEM business, which made small profits and low gross profit margins, is conducive to the realization of the strategic goal of "brand transformation" from the production and management to the brand operation. The gross profit margin of the company's brand clothing business will be further improved, which is conducive to the healthy and sustainable development of the company.

The sale of new horse clothing processing business data can also confirm this point. As of May 20, 2010, the total assets of Singapore and Malaysia clothing company were 1 billion 455 million 60 thousand yuan and net assets of 540 million 290 thousand yuan. In 2011 1-5, the operating income was 842 million 220 thousand yuan, the net profit was 13 million 760 thousand yuan; in 2010 1-12, the operating income was 2 billion 413 million 460 thousand yuan, but the net profit in the whole year was 20 million 710 thousand yuan. A block loss The business is obviously not a high quality asset.

In fact, upgrading to brand operation is the trend of the times. And for many years, the profits of YOUNGOR's clothing sector mainly come from the contribution of brand clothing. Especially in the past two years, it has accelerated the brand development strategy of clothing.

In the past two years, while consolidating the market share of the original leading brand YOUNGOR, YOUNGOR has launched five new brands: MAYOR, GY, Hart Schaffner Marx, CEO and HANP (HMA). Each brand continues to strengthen the process reengineering and optimization of brand operation, and has initially formed a development model of independent design, sharing procurement, logistics and channel resources, basically realizing the transformation from quantity expansion to brand promotion.

YOUNGOR's annual report shows that in 2010, the company's brand clothing business achieved 6 billion 98 million 615 thousand and 800 yuan of business revenue, an increase of 9.05% over the same period last year, and a net profit of 705 million 13 thousand and 400 yuan, an increase of 93.36% over the same period last year. Among them Sale Revenue was 3 billion 58 million 98 thousand and 900 yuan, an increase of 18.71% over the same period last year and gross margin of 62.85%. During the reporting period, MAYOR, GY, Hart Schaffner Marx, CEO and HANP five brands of business outlets totaled 252, to achieve 91 million 41 thousand yuan in the recovery of goods.

Taking its brand name shirts as an example, the sales revenue of YOUNGOR's domestic shirts in 2010 reached 1 billion 92 million 840 thousand yuan, an increase of 20.65% over the same period last year, with gross profit margin reaching 66.36%. And this gross margin has been comparable with some international brands. LV has a gross margin of about 64.6% and a gross margin of Burberry of about 62.8%, which is also much higher than the gross domestic product gross domestic product. {page_break}

As a result, YOUNGOR's new OEM business will be stripped off. This is highly consistent with the strategy of making the main garment industry bigger and stronger and enhancing brand upgrading.

In fact, Li Rucheng, chairman of YOUNGOR group, has publicly stressed the necessity of transformation and upgrading of enterprises in several occasions over the past two years.

He said that YOUNGOR is now transforming from a production and marketing enterprise to a brand oriented enterprise, and is also considering a higher level of industrial upgrading. In the future, YOUNGOR will expand its scale through acquisition and merger through the platform and resources of Singapore and Malaysia. At the same time, we will gradually reduce the share of OEM export with low gross profit margin and more resources. The company's brand clothing assets will be further optimized, and the marginal benefits of clothing will be further highlighted. Enterprises should turn from technology intensive to artistic and creative, and turn YOUNGOR from a garment factory into a "creative and creative cultural and artistic world".

For YOUNGOR's main industry brand strategy, CITIC Securities researcher Li Xin and Ju Xinghai think YOUNGOR brand clothing competitive advantage is outstanding, the future will accumulate thick, valuations have great advantages. It is expected that YOUNGOR brand will maintain 10% of the channel expansion speed and strengthen fine management in 2010 (14 thousand yuan in 2007, 36% higher than in 2007), and the subsidiary brands have entered the profit period of rapid expansion.

Real estate and financial investment two line "blossom"
Li Rucheng firmly believes that in the industry layout, YOUNGOR should focus on three core sectors: clothing holding, home holding and financial investment.

Home ownership means real estate. In 2004, YOUNGOR entered the Suzhou real estate market; in 2007, YOUNGOR entered the Hangzhou real estate market; in 2010, YOUNGOR entered the Shanghai market. At present, the YOUNGOR real estate sector has been based on Ningbo, upgrading Suzhou, consolidating Hangzhou and attacking Shanghai, and initially completed the strategic layout of the Yangtze River Delta.

In 2010 alone, a total of 18 projects (including joint venture projects) were sold, including 9 new push items, such as Long Island garden in Ningbo, Hangzhou Xixi sunny snow, etc., and the total amount of pre-sale order was 11 billion 855 million yuan, an increase of 65.55% over the same period last year.

2010 annual report shows that in 2010, YOUNGOR's real estate development revenue increased by 6 billion 842 million 832 thousand and 200 yuan, an increase of 32.22% over the same period, with a profit margin of 33.06%, a 11.59 percentage point decrease compared to the same period last year. It can be found that its real estate income is higher than that of the main clothing business, although its profit rate is slightly lower than that of clothing, but this is because the gross profit margin of the three phase of the Suzhou future city settlement during the reporting period is relatively low, only 21.53%.

In addition, in this era of hot financial investment, YOUNGOR also participated in it, and financial investment contributed a lot to it. {page_break}

In 2010, YOUNGOR invested 5 billion 172 million 492 thousand and 100 yuan to participate in 12 private placement investments of listed companies, holding 10 PE investment and other investment projects, and accumulative total investment of 946 million 266 thousand and 500 yuan. The investment projects include Shanxi sunshine coking (Group) Co., Ltd., Hangzhou pioneering software Limited by Share Ltd and Ningbo Jintian copper group (Group) Limited by Share Ltd. Up to the end of the reporting period, we realized floating profit and realized net profit of 1 billion 245 million 412 thousand and 900 yuan.

In fact, YOUNGOR shares in the Bank of Ningbo many years ago. At that time, financial investment was far less popular than before. After that, YOUNGOR made a big profit. This has made YOUNGOR taste the sweetness of financial investment, and it is out of control. As of December 31, 2010, YOUNGOR held Ningbo Bank (002142) 179 million shares and 70 million 500 thousand shares, with a market value of 2 billion 219 million 600 thousand yuan and 874 million 200 thousand yuan at the end of the term.

From the perspective of investment projects, it is very diverse. However, a comprehensive analysis reveals that YOUNGOR is relatively keen on investment banking and mineral resources.

Under the guidance of diversification strategy, Li Rucheng has also portrayed a grand blueprint for YOUNGOR's future.

He pointed out that in 2010, the total operating income of the group was 33 billion 480 million yuan. By 2015, YOUNGOR's revenue will reach 50 billion 900 million yuan, and its total assets will reach 109 billion 900 million yuan, and its comprehensive strength will enter China's top 100, narrowing its gap with the world's top 500. Five years later, let YOUNGOR's "clothing" become the first in China, let YOUNGOR brand clothing expand its leading edge relative to the domestic competitors, and narrow the gap with foreign brand clothing giants. "Home buying" has entered the top 20 in the domestic market, becoming a well-known real estate development enterprise in the Yangtze River Delta region, achieving an annual sales growth of 31%. Financial investment should have national influence, mainly targeted at private placement and PE, with venture capital and two market as the supplement, and carefully select projects around the group industrial layout, actively identify potential high-quality projects, and cultivate new business growth points.

In fact, YOUNGOR's diversification strategy layout has become a typical case of domestic textile and garment enterprises bigger and stronger, and has greatly enhanced its brand value. Reflected in the market, a number of brokerages rated their purchases as "buy", "overweight" or "strongly recommended".

Zhang Bin and Cao Xute analysis of State Securities Securities pointed out that YOUNGOR belongs to the "multi faceted expert" whose value is underestimated. The market has always given the company a lower level of valuation. In 2010, the static P / E ratio of the company was only 9.7 times, whether it was real estate or textile companies, which was significantly lower than the average valuation level of the industry because of the compound business structure of the company. If Future Ltd can successfully divide textile and clothing and real estate assets, and separate listing, it will present a clearer business structure and strategic objectives, which will break the current valuation bottleneck.
CITIC Securities also believes that the value of the company's brand clothing is not fully reflected in the stock price, and there is room for improvement in real estate and financial value in the future.