Lining Introduced The 750 Million Strategic Investment &Nbsp; Against The First-Line Brand Sinking.

In 2012, for

"2012 will be a year when domestic sports brands enter defensive warfare, and this year will be very difficult."

Shoes and clothing

Reporters interviewed learned that in 2011 the domestic sports brand collective "big inventory" phenomenon, cleaning up inventory became their focus in 2012.

At the same time, however, there is no sign of slowing down of the movement of international first-line sports brands to the two or three tier cities.

Domestic sports brands now have to face the hardship of "internal and external troubles".

A few days ago, China's leading sports brand Lining announced the introduction of a strategic investor, TPG, an American private equity fund with extensive experience in the retail industry.

This move led Lining stock to rise 21% in the next two trading days, but from the industry's point of view, Lining's introduction of strategic investors is actually "preparing for war 2012".

The introduction of war and investment is hard to achieve in the short term.

For Lining, in the spring of 2012, there was finally a good news for the market.

TPG, a well-known US private equity fund, is a shareholder of Lining.

TPG is the world's leading Private Equity Investment Firm, founded in 1992.

In addition to the newly introduced TPG, Lining, who has already been the strategic investor of Government Investment Company, has also increased the number of's Government Investment Company.

TPG subscribed to Lining's 560 million yuan convertible bonds, while GIC subscribed 189 million yuan of convertible bonds.

In addition, TPG will purchase 53 million shares of common stock held by Lining Group Chairman Lining, at HK $6.60 per share.

Moreover, senior management, including Lining group chief executive Zhang Zhiyong and chief financial officer Zhong Yiqi, will also buy 4 million common shares held by Lining.

After completing the paction, Lining still holds 23% of the Lining group's largest single shareholder.

Convertible bonds have a 5 year period and the total convertible bonds issued to TPG and GIC member companies are 750 million yuan.

If all of the shares are converted into shares, the shares will be held at HK $7.74, and TPG will hold 142 million shares of common stock, representing about 12% of Yu Lining's expansion of capital stock, while GIC will hold about 93 million ordinary shares, equivalent to about 8% of Lining's expansion of capital stock.

However, the entry of such a strong strategic investor has not changed the industry's expectation of Lining's 2012 performance.

Shortly before the news came out, Lining announced the 2011 performance forecast that "the income of the group is expected to decline by about 6%~7% compared with 2010, due to the weak growth of orders and the recovery of some dealers' inventory."

Deutsche Bank pointed out that Lining will issue 750 million RMB convertible bonds to TPG and GIC and 53 million shares held by major shareholder Lining, believing that the strategic value of TPG will take some time to realize.

Similar to Deutsche Bank's view, Ye Shangzhi, chief strategist of first Shanghai, said in an interview with reporters that the success stories of TPG in the domestic consumer market were not replicable. "Lining still has uncertainty after introducing TPG."

"Lining should have foreseen for 2012 of the bad market environment."

Ma Gang pointed out that "the change of soft management brought by strategic investors is more to cope with the difficulties of 2012."

Two or three tier cities become the main battleground

For the difficulties of 2012, sports brands in China can be foreseen.

"Dealers have shown a cautious wait-and-see mentality through many orders last year," he said.

One industry insider pointed out to reporters that "when the inventory is too large, dealers are unwilling to take risks, and they are more cautious when ordering."

Data show that Lining in the first half of 2011, the stock amount of 992 million yuan, while the end of 2010, the stock amount of 806 million yuan, the stock amount increased by about 200 million yuan.

"In the first half of the year, the income of the company was 4 billion 289 million yuan, which was reduced by 4.8% compared with 4 billion 505 million yuan in the same period last year. Net profit was 294 million yuan, which was nearly 50% lower than that of the same period last year, compared with 582 million yuan a year."

Lining announcements pointed out.

Data released by Lining's colleague PEAK showed that the order volume in the second quarter of 2012 increased by 9.5% compared with the same quarter in 2011. This is the lowest increase in PEAK's orders since 2009, after which PEAK's orders increased by 20% over the same period.

Anta sports business in the third quarter has also declined sharply.

According to the expected data released by Anta, sales growth in the same quarter in the third quarter has declined, while the retail discount rate has also expanded.

"2012 will be a very sad year for these domestic brands."

Ma Gang pointed out that in 2011, there was a big stock phenomenon in domestic brands, and cleaning up inventory was the focus in 2012.

The major domestic sports brands are now stranded in inventory and the industry is in a period of adjustment. "In 2012, the domestic sports brand was focused on the adjustment of the enterprises themselves".

This adjustment Lining has already begun.

In addition to the integration of sales channels for the 500~600's less profitable franchisees in the middle of 2010, the wholesale discount rate was reduced by 2~3 percentage points in the second quarter of 2011.

"Therefore, the company's sales in 2011 will be significantly slowed down by the integration of the sales network, while the gross profit margin in 2011 will be reduced by one percentage point."

Ma Gang pointed out that the adjustment will start from Lining to the whole industry.

At the same time when domestic brands are busy, international brands are beginning to exert their strength to the two or three tier cities in China.

According to Adidas's earnings report, the first three quarters of sales revenue of 10 billion 81 million euros, according to the exchange rate unchanged situation, compared with the same period last year 9 billion 59 million euros increased by 14%, of which Adidas sales in the first three quarters of China's sales reached 900 million euros, compared with the same period last year 721 million euros, the same growth of 25%, excluding exchange rate factors, an increase of 28% over the previous year, the growth rate ranked first in Adidas six market.

At the same time, Nike's earnings report showed that in the first 3 months of November 30, 2011, its revenue in China was $650 million, up 35% from the same period last year.

At the same time, the international brand has expanded rapidly with the growth rate of more than 20%. Meanwhile, domestic brands have to choose defensive battle, and the defensive front is the two or three line city in China.

Data show that domestic brands from two or three line cities accounted for 70%~80% of the revenue. Ma Gang pointed out that the competition in the two or three tier city market will become more and more intense, and the pressure on domestic sports brands will be bigger and bigger.

Internationally renowned sports brands are also increasing the mining of the two or three tier cities in China.

In 2010, Nike China and Adidas China launched their 5 year plan in succession. They all indicated that the new stores in the two or three tier market will be increased in the next 5 years, and the products that are closer to the two or three tier market will be echoed. The target market will be directed at the main market of domestic brands of physical education products, and the future competition in the two or three tier market will be even more tragic.