YOUNGOR: Financial And Real Estate Two Carriages Fall Into Mire

YOUNGOR's real estate business is affected by macro regulation and control, and equity investment is also bleak due to the market downturn.

Known as the "three carriages".

The three major businesses of Finance and real estate have been trapped in two pools.

Early on clothing,

Businesses started and later expanded real estate and equity investments.

The development course of YOUNGOR can be described as a typical example of "industrial excellence and investment".

However, doubts about this development model have always followed.

"Hard earned clothing profits are unable to fill the gap in the cash flow of real estate, and the hidden troubles of capital chain breakage and huge losses are always there. Even then, YOUNGOR's clothes will be dragged down and drowned."

Fang Jianyong, a Ningbo market observer who has focused on the history of YOUNGOR development, said in an interview with reporters.

In this regard,

Li Rucheng, chairman of the board, said YOUNGOR would not own 20 billion of its net assets if it did not invest in real estate and equity.

However, when YOUNGOR's real estate business is under the influence of macroeconomic regulation, its equity investment is also bleak due to the market downturn.

The gloomy market forced YOUNGOR to "tighten its belts" for the winter. This also directly affected its cooperation mode with Investment Company Kai Shi investment. The two sides' "enmity and hatred" became the focus of recent market attention.

At this point, YOUNGOR is known as the "three carriages" clothing.

The three big businesses of the real estate industry have been trapped in two pools and their future is full of uncertainties.

Kay stone

"At present, the market is depressed, and YOUNGOR did withdraw some of its funds from April 2012, which is normal."

Chen Jiwu, general manager of Kai Shi, told reporters that "YOUNGOR and Kai Shi investment are currently adjusting their business and structure."

The reason for the breakup has attracted the attention of the market, because Kay stone investment has played an important role in the development of YOUNGOR.

Public information shows that Kay stone investment registered capital of 1 billion yuan, the main business of investment management, investment consulting, etc., is Ningbo Shengda Development Co., Ltd. shares accounted for 70% of the holding subsidiary, YOUNGOR chairman Li Rucheng holds 19.31% of Ningbo Shengda shares.

In December 2008, YOUNGOR hired Kai Shi investment as its investment adviser.

The investment agreement between the two sides shows that Kay stone investment provides professional investment analysis to YOUNGOR's equity investment projects assets, available for sale financial assets and trading financial assets, and YOUNGOR pays related consulting fees.

In view of Ningbo Shengda's indirect controlling shareholder of YOUNGOR, it also controls Kay stone investment. According to the listing rules and relevant documents of the Shanghai stock exchange, the above matters constitute related pactions.

"The cooperation mode between YOUNGOR and Kay stone investment can be said to be the relationship between customers and the companies providing services. Kai Shi investment provides advisory services for YOUNGOR."

Kai Shi investment insider said.

As a matter of fact, "there is much more cooperation between the two sides. YOUNGOR has also been directly involved in the product of Kai Shi investment. YOUNGOR, as a whole, is not only a controlling shareholder of Kai Shi investment, but also its consulting client or limited partner (LP)," Fang Jian Yong said.

The above investment agreement also shows that YOUNGOR pays advisory fees to Kay stone investment annually by 1% of its total investment.

When the annual net return is less than or equal to 10%, YOUNGOR only pays for consulting fees. When the net yield is greater than 10%, YOUNGOR extracts 20% of the performance reward from over 10%.

Kay stone investment provides advisory services for financial assets held by YOUNGOR or holding subsidiaries. YOUNGOR pays 0.5% of the paction volume for consulting services.

"The considerable cost of consulting and profit deducting is the standard of fund fees. Why is Kay stone investment so good?" Fang Jianyong told reporters in an interview with this reporter.

Oddly, why does YOUNGOR allow such an unequal investment advisor agreement to exist for a long time?

"It can be said that Kai Shi is actually intercepting the cash flow of YOUNGOR group.

Kay stone investment can not lose money, the ultimate benefit is Li Rucheng shares 19.31% of Ningbo Shengda. "

Fang Jianyong said.

In this way of cooperation, at least in the short term, YOUNGOR itself has also tasted the sweetness.

Relying on Kai Shi investment, YOUNGOR in capital

Repeated attacks.

In 2009, YOUNGOR took part in the private placement investment of 9 listed companies, all floating profit; equity investment business achieved net profit of 1 billion 625 million yuan, up 404.71% over the same period.

In 2010, YOUNGOR's private placement investment totaled 374 million yuan, holding 10 PE investment and other investment projects, and its financial investment business achieved a net profit of 1 billion 245 million yuan in that year.

Under the aura of excitement, Li Rucheng showed "ambition". "Behind many clothing industries, there is a consortium as a backing. There is no big financial support. It is difficult for the enterprise to survive for more than a decade or more."

However, financial investment is a challenge for the company's sound operation. A long-term YOUNGOR tracking broker said in an interview with reporters that whether PE investment or YOUNGOR specializes in private placement is a long-term investment, and the long-term occupation of corporate capital is likely to have an impact on the main business.

Three carriages two fall

The huge float of equity investment once made YOUNGOR unlimited.

However, the good times didn't last long. After that, Li Rucheng made a cold war first.

In 2011, YOUNGOR took part in the issuance of 13 listed companies. The net profit of financial investment business dropped to 487 million yuan, down 60.90% compared with the same period last year. The private placement and PE investment totaled 2 billion 950 million yuan, down 44.78% from the same period last year.

The gloomy market has prompted YOUNGOR to "tighten its belts" for the winter. According to YOUNGOR insider, in the first half of 2012, the management cost of the company decreased by nearly 200 million yuan, and the consultation fee was reduced by 100 million yuan.

The rational return of investment environment has a direct impact on its cooperation with Kay stone investment.

In March 2010, YOUNGOR broke the practice of paying consulting fees at a certain proportion of the total investment, instead of paying the consulting service fee to Kay stone investment by 15% of the realized investment income.

5 months later, it was changed to a project recommended by Kai Shi investment.

In addition, the once proud real estate business has not delivered the warmth in the cold winter. With the continuous macro-control of the real estate market, YOUNGOR's real estate business plummeted in 2011.

"Whether YOUNGOR's real estate is profitable or whether there is a real risk depends on the cost at the beginning, the level of debt, the speed of sales, and the current property prices."

Gu Haibo, senior economist and independent economist at Shanghai Changning Housing Development Bureau, said.

"The first half of 2012 did not take place, temporarily did not expand the real estate business, advertising costs did not increase significantly.

YOUNGOR's operation is "on thin ice".

The broker said.

At present, YOUNGOR's cash account is 3 billion 230 million yuan, but it should deal with short-term interest bearing liabilities of 17 billion 460 million yuan. Real estate industry analysts warned that the move "increased liquidity risk, and the further development of real estate business is directly subject to short-term liquidity."

Real estate business "not to force", financial investment business also "fail to win".

The Shanghai Composite Index fell 30% in 2011.

"The systemic risk of the business is too great.

Bear market has hit YOUNGOR hard. "

The broker analyzed.

Since the second opening of IPO in the second half of 2009, China's A shares issued a total of 730 new shares in the first tier market, and 103 of them broke up on the day of listing, accounting for 14.11%.

The market generally reflected that "lying in the era of money making is gone forever."

Investment is bogged down in the mire, to some extent, it affects YOUNGOR's overall strategy.

In addition, "two housing market and stock market bubbles from 2006 to 2007 and 2009 to 2010 led the industry to turn from the main industry to the unfamiliar high risk industry. The sweetness of gambling has been forgotten. The share of industry in YOUNGOR business has been declining to a pitiful 25%", Fang Jianyong said.

Under pressure, Li Rucheng has expressed many times on some occasions that he will pay more attention to the development of the clothing industry. "In China, financial investment is a new industry, YOUNGOR can participate in it, but it can not be used as the main industry, and real estate is regulated year after year. In this case, we must" return to the core ". It was three legs walking at the same time, now it is clothing industry, and the other two industries are deputy.

In Li Rucheng's view, "only by concentrating the team on a core industry can we have more advantages than other industries."

This is interpreted by the industry as "returning to the main business".

However, Liu Xinyu, YOUNGOR's Dong MI, thinks this statement is not accurate. "YOUNGOR's main business is clothing."

The company said in its 2011 Annual report that the scale of financial investment will be gradually reduced in the future, and further increase will be made.

The input intensity.

From the point of view of YOUNGOR's profit composition, this change has already appeared. "In the first 5 years, the profits of financial investment, real estate and brand clothing accounted for three items in 5:3:22011 years, accounting for 4 of the total profits of 1/32012. The other two accounts for 3 of the total profits, and the future will be adjusted to 5 of the main industry."

Although YOUNGOR maintains 7 billion 526 million of its revenue in the garment industry, the competition in the industry is becoming increasingly fierce, the cyclical shocks are becoming shorter and shorter, and the factors surrounding the encirclement and suppression of foreign brands remain. YOUNGOR's goal of achieving "20% growth at the end of 2012" can be achieved and needs to be tested by the market.