In The First Half Of The Year, The Poor Performance Organization Looked At The Airport Share &Nbsp; Lining Suffered The Reshaping Of The Labor Pains.

Since July, the Hongkong stock market has been suppressed by the international short selling force, and the Hang Seng Index (HIS.HK) has closed for three weeks in a row.

The H-share clothing and footwear sector represented by Lining (02331.HK) is also not immune, especially in recent environmental groups, pointing out that 14 clothing brands such as Lining failed to effectively solve the problem of pollution from their suppliers, causing the share price of listed companies to weaken significantly.

As a representative of H-share clothing and footwear listed companies, Li Ning Co has attracted much attention recently.

In July 7th, Li Ning Co released the first half of 2011 operation and performance forecast and annual outlook announcement at the Hongkong stock exchange. It is expected that the net profit margin in the first half of this year will decline from 12.9% in the same period last year to 6%-7%.

It is also expected that raw material costs will increase substantially in the second half of this year, and gross profit margin will drop in the second half of the year, and the interest rate of shareholders should be reduced by about 1 to 2 percentage points over the first half of this year.

Li Ning Co said net

In July 7th, Lining's share price plummeted 15.77%, the lowest in 27 months.

Over the next three days, Lining's share price fell from HK $13.7 to HK $10.20, with the total share capital of 1 billion 56 million calculated. In the three days, Lining's market value evaporated nearly HK $3 billion 700 million.

Lining and China's move (03818.HK) issued a profit early warning, and the share prices of domestic sports brands listed in Hong Kong in July 10th plunged.

As of the end of the day, Anta sports (02020.HK), XTEP International (01968.HK) shares fell more than 8%, PEAK sports (01968.HK) share price fell 5.89%.

Poor brand pformation and poor performance

In the announcement, Li Ning Co repeatedly stressed that the decline in performance was due to the original.

In fact, the pformation strategy of brand remolding has been released since June 30, 2010.

In the internal operation, first of all, the company's integration of stores and channel adjustment did not bring the expected revenue, and inventory digestion did not reach the established target. The company's two consecutive quarterly orders fell.

Li Ning Co announced in the announcement that as of June 30, 2011, it has completed the integration of 256 low efficiency single store distributors.

It is estimated that by the end of 2011, the integration of 400 single store distributors will be completed.

In terms of retail data, Lining's growth in the first half of the year is still at a low level, with a total of 8163 stores, and stock levels have risen.

In the fourth quarter of the Li Ning Co's new product order meeting, the order amount was calculated at retail prices, an increase of more than 5% from the same period last year. The order volume calculated from the wholesale shipping angle dropped by about 1% compared with the same period last year.

According to Lining brand's 2011 annual order meeting data, the annual new product orders amount calculated by retail pricing increased by about 1%, while the annual order amount calculated according to wholesale shipment angle dropped by more than 5% compared with 2010.

In addition to not optimistic business data, at the end of May, Lining COO (chief operating officer) Guo Jianxin, CMO (Chief Marketing Officer) Fang Shiwei, director of e-commerce, Lin Li resigned in succession, but also led to market concerns about personnel shocks.

In the external competition, the industry does not buy Lining's brand positioning.

In the high-end market, Nike and Adidas are gradually increasing their investment in the Chinese market and have a greater appeal to young consumers.

In the mass market, Jinjiang enterprises are entrenched, such as Anta, XTEP and PEAK, covering two or three line cities in a more competitive price range, while Lining's sports shoes.

In the market growth of 20% over the same period, Lining failed to perform well, which made the capital market lose confidence in it.

As early as December 20, 2010, Lining shares fell 23% on that day, and the market value evaporated nearly HK $4 billion 500 million.

Among them, J.P. Morgan bought 12 million 883 thousand shares at a price of HK $18.24 per share, while Li Ning Co's target share price dropped by 23%.

At the end of May 2011, the departure of executives also caused Lining's share price to fall by 8%.

At present, Lining has a market capitalization of about HK $10 billion 800 million, which is close to XTEP and less than 1/3 of Anta sports market capitalization.

Domestic institutions and international investment banks have also lowered their ratings of Lining.

JP Morgan lowered Lining rating from "neutral" to "reduction", and sharply reduced the target price by 49% to HK $8.

In July 8th, CLSA reduced the Lining rating from "lost market" to "sell", and the target price was reduced from HK $13.3 to HK $9.8.

In July 15th, Guotai Junan released a research report. Li Ning Co's net profit fell 52% in the first half of 2011, and its target price dropped from HK $12.09 to HK $10.75, corresponding to 2.5 times the 2011 market forecast rate.

Guotai Junan international Peng Gangxiang believes that the recent profit warning of Lining (02331.HK) and China trend (03818.HK) is far worse than expected, and has brought adjustments to the entire sporting goods unit.

At present, the biggest worry comes from the inventory at the retail side. The process of inventory will inevitably affect the sale of domestic industry in the second half of this year and 2012.

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Lining's price increases are hard to gauge

In order to reverse the adverse situation faced by the company, in June, Lining concluded its fourth quarter 2011 new product order meeting, announced that the fourth quarter footwear product price will rise 7.8%, the clothing will increase 17.9%, in order to cope with the possible profit decline which the cost increases.

This is Lining, XTEP, 361 degrees, Anta, PEAK, the five well-known sports brands after the collective price increase in April, once again raise the price.

Zhang Xiaoyan, director of external affairs and public relations of Li Ning Co, attributed the increase in price to the industrial environment, such as the increase in rents of raw materials, manpower and stores, and the cost of product development.

Zhu Qinghua, a light industry researcher at CIC, pointed out that the price of domestic sports brands such as Lining increased at the current time, so that cost pressures could be used as a reason to weaken consumers' sensitivity to price increases.

But Zhu Qinghua also pointed out that the price advantage of domestic sports brand has been gradually weakened, which will make its sales volume suffer a certain impact.

According to the Research Report of GF, at present, domestic sports apparel is in mature stage, which has both the impact of international brand channel sinking and price shocks, and the pressure of rising costs. Excessive price increases will suppress terminal demand.

Guo Jin securities recommends a wait-and-see investment for the H-share sports apparel sector.

State Securities believes that the market needs a longer time to integrate.

In addition to raising prices, Lining announced in July 7th that he will intensify the reform efforts in the announcement issued in July 7th, mainly including: stepping up the promotion of channel reform, further promoting the retail end inventory, strengthening the management of the distribution market, improving the retail efficiency and improving the cash turnover; continuing to increase the intensity of brand input, further refining the brand strategy, optimizing the organizational structure and business processes, constantly optimizing the product structure of SKU, combing the pricing strategy of products, improving the performance price ratio of products, and taking the growth of sales volume as a more important consideration.

In addition, on July 11th and 12, Li Ning Co CEO Zhang Zhiyong and CFO Zhong Yiqi also increased their stake in the company, involving an amount of 1 million 219 thousand yuan.

Previously, according to the stock data of the Hongkong stock exchange, JP Morgan and the Federal Bank of Australia had previously reduced Li Ning Co shares by 206 million 700 thousand yuan.

In July 18th, the Li Ning Co announced that it would grant the directors and senior management of the company a share option to subscribe for a total of 6 million 699 thousand and 100 shares of the company.

The grantee includes 8 directors and 15 senior managers.

The announcement shows that the exercise price of the option is HK $9.896 per share, and some share options are linked to performance.

Li Ning Co's massive stock incentive is also aimed at encouraging executives to boost market confidence in the company's future.

However, despite the same attitude towards Nike and Adidas, Lining's current Hong Kong stock market value is only HK $10 billion 767 million, which is comparable to XTEP international, PEAK sports and other sports brands.

Facing the double pressure of business and capital market, and the attack from domestic and foreign competitors, the labor pains of Lining's brand remodeling will continue for a longer time.