XTEP Stock In The First Half Amounted To 887 Million Yuan, An Increase Of Over 90%

China's local sports brand XTEP announced its performance in the first half of this year on 16, the gross revenue continued to grow, and the gross profit margin remained stable. However, the amount of inventories and the receivable trade increased significantly. The cash flow generated by business activities was even more negative.

The semi annual report shows that total revenue increased by 26% to 2 billion 570 million yuan compared with the previous year, operating profit increased by 25% to 564 million 300 thousand yuan, and the median dividend was HK 13 cents per share, an increase of 30% over the same period last year.

But the other three indicators make people worry about XTEP's future performance.

In the first half of this year, XTEP's inventory amounted to 887 million yuan, an increase of about 92%, of which the finished product amounted to 474 million yuan, compared with 84 million yuan in the first half of last year, the former was 5.64 times the latter.

XTEP's receivables

In the first half of, the total stock of Anta was 546 million yuan, an increase of 20.3%. Among them, the finished product was 303 million yuan in the first half of this year, 256 million yuan in the same period last year, and the former was only 1.18 times that of the latter.

Insiders say that a significant portion of XTEP's revenue may become stock and the other part will become receivable trade.

More inventory means that the cycle of capital from investment to sales will be lengthened, and in order to deal with inventory, the products can only be sold at a discount. Any occurrence of the situation will have a significant negative impact on the operation of the enterprise.

Semi annual report shows that the average stock turnover days of XTEP in the first half of this year rose from 46 days in 2010 to 81 days in the first half of this year. As a comparison, XTEP has more than doubled its index than Anta. In addition, the total working capital turnover day of XTEP has been extended from 27 days in 2010 to 66 days in the first half of the year.

The increase in inventories will reduce the cash inflow of business activities. In the first half of this year, the net cash inflow from XTEP was negative at 335 million yuan. In addition, other factors affected XTEP's cash and cash equivalents in the first half of the year, amounting to 1 billion 349 million yuan, a decrease of about 1 billion 95 million yuan over the same period last year.

For the reasons for the sharp increase in inventories, the Secretary of XTEP chairman Ding Shuibo was contacted. As of press release, XTEP did not respond.

Chinese sporting goods enterprises generally adopt the futures system, and sporting goods enterprises hold 3~4 orders annually.

In order to maintain sustained growth in performance, some enterprises will ask dealers to book a larger number of products. This mode will exaggerate the actual demand of the market for the company under certain circumstances, which may lead to a considerable number of products being oversold in the distributors' stores and become inventories.

In 2008, due to the over optimism of the sporting goods market in China, the backlog of dealers in Adidas and Nike was more serious.

Since last year, Li Ning Co and China have launched a large increase in inventories. Insiders say that in order to digest inventories, Li Ning Co and China are handling inventory in the form of online sales by recycling inventories, so as to unlock dealers' funds due to inventory.