YOUNGOR Wants To Invest In Brand Clothing

YOUNGOR, a famous clothing company in China

The profit margin of the garment industry is not high. In recent years, it has been accused of "not doing the right thing" in the field of real estate and finance.

Li Rucheng, the head of the company, once responded to this question: "do not regard YOUNGOR as a clothing enterprise.

Maybe decades later, it's possible to build satellites. "

Since the beginning of last year, the macro-control of the real estate market and the sharp fall in the domestic stock market have made YOUNGOR's diversification strategy suffer heavy losses, making the satellite temporarily impossible.

Now we have to adjust our business strategy and concentrate our resources on our brand clothing.

Background

Last year, YOUNGOR participated in the private placement issue, which cost nearly 3 billion.

The annual report shows that last year, the company disposed of pactional financial assets and available financial assets received an investment income of 1 billion 178 million yuan, accounting for 44.94% of the total profit of YOUNGOR.

Data show that from June 23, 2010 to May 7, 2012, Jiang Qun, vice chairman of the company, conducted 30 stock reduction pactions through the two level market, with an average reduction of 138 thousand and 900 shares each time.

Marching into real estate

As a large private enterprise in Ningbo, YOUNGOR has made great progress into real estate in the past few years. It has become the king of Ningbo, Hangzhou and Suzhou at a high price.

Housing prices soared much more than clothing.

In 1999, the government began to stop the welfare housing distribution system nationwide and implement the monetization system of housing distribution. At the same time, the commercialization and marketization of Chinese real estate also started.

So far in the past more than 10 years, although the price adjustment has been phased in adjustment due to the role of government regulation and control, the overall trend of average paction price has maintained a steady upward trend, and prices rose rapidly in 2007 and 2010.

Housing prices are rising faster and profits have increased substantially. This is quite tempting for garment companies with low profits, small industry space and fierce competition.

As a leader in the domestic garment industry, YOUNGOR will not let go of such investment opportunities.

After 1998, YOUNGOR began to expand in the real estate industry by virtue of its various advantages in Ningbo.

YOUNGOR is also known as the initiator of Ningbo's high-grade development.

Crazy to become the three land King

Under the pressure of real estate regulation, YOUNGOR still spends a lot of money, so it is also referred to as the promoter of high housing prices.

Public information shows that as early as April 21, 2004, YOUNGOR real estate photographed three plots of Hudong 03, 04 and 05 in Suzhou Industrial Park in Suzhou, with a total price of 1 billion 413 million yuan. This is the first place that YOUNGOR won in different places. In July 2007, YOUNGOR went to Hangzhou to become the "king of Hangzhou".

In February 2008, YOUNGOR home returned to Ningbo, with a total price of 979 million 700 thousand yuan to win a land mass in Beijiao Road, Ningbo, with a floor price of 13100 yuan per square metre, which set the highest price for Ningbo land listing, and Ningbo's new "land king" was announced.

Buy land at a high price and lose some competitiveness

YOUNGOR, which has a high price, has to build a house with high-end positioning, but the buyers in the Yangtze River Delta do not buy it.

As a high-end real estate developer, YOUNGOR's brand is not as old as real estate developers such as Greentown.

Since then, the purchase restriction policy has affected YOUNGOR's development to a large extent.

Last year's annual report shows that the main business brand

YOUNGOR's profit in real estate development is not high.

YOUNGOR's brand apparel has a profit margin of 65.66%, while the profit margin of real estate development is only 44.75%.

Originally thought that investment real estate can get higher profits, did not expect to take the wrong time, the price is too high, making the income far less than expected and other housing enterprises.

In the 5 years from 2007 to 2011, the net profit of YOUNGOR house from real estate was nearly 3 billion yuan, with an average annual revenue of about 600 million yuan.

In most years, YOUNGOR's real estate business occupies more than 10 billion yuan.

Net profit and capital investment have formed a strong contrast.

Such returns are even lower than the one-year lending rate of banks.

At present, YOUNGOR's book cash is 3 billion 230 million yuan, but it should deal with short-term interest bearing liabilities of 17 billion 460 million yuan.

Under such a debt service pressure, YOUNGOR did not take it in the first half of 2012, and did not expand its real estate business for the time being.

Even so, YOUNGOR's 21 billion 252 million yuan real estate inventory at the end of last year also allowed companies to operate on thin ice.

Equity investment sink into mire

Once upon a time, the scale of financial investment of YOUNGOR group expanded rapidly under the management of Kai Shi in Shanghai, and its investment income was also considerable.

But finance itself is a high-risk industry. Since last year, most share prices of A shares have dropped sharply, resulting in YOUNGOR having to adjust its past diversified development strategy, reduce financial investment and return to the main garment industry.

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Financial investment was the biggest source of profit.

In 2009~2011, YOUNGOR's financial investment business achieved net profit of about 1 billion 625 million yuan, 1 billion 245 million yuan and 487 million yuan respectively, and contributed more than 30% to the annual net profit of the company.

Over the past few years, the "new rule of speculation" that has been distorted in China's capital market has been very effective: whenever new IPO or private placement is issued, investors can make money if they can win the lottery.

But in 2011, with the downward trend of the macro economy, the A share market continued to decline, and most stock prices cut off, and many fixed stocks were severely broken.

Private placement is going on

YOUNGOR participated in the private placement of 13 listed companies last year, with a total investment of 2 billion 725 million yuan.

Under the tragic market environment, the book value of the 13 companies held by YOUNGOR has shrunk by more than 1 billion 600 million yuan.

Perhaps YOUNGOR is not satisfied with the performance of last year. Since this year, YOUNGOR has not appeared in the subscription list of any listed company's private placement.

Kay stone investment "break up" rumors

On the eve of the mid-term earnings announcement this year, YOUNGOR's rumour about "breaking up" with investment adviser Kay stone investment has emerged.

Media reports said that because of the gloomy market situation, the failure of investment, and the continuous division of interest lines, YOUNGOR and Kay stone investment had "fallen".

But since then both companies have been downplaying rumors, but they also confirm the fact that Kay stone will adjust its equity structure.

Three carriages fall apart

For such a business situation, Li Rucheng, chairman of the company, put forward the solution: "strictly control the investment in real estate, adjust the scale of investment in a timely manner, and concentrate resources on brand clothing."

YOUNGOR, a garment maker, has achieved three points in recent years. However, under the control policy, real estate is no longer booming, A shares are in a slump, and financial asset value is facing fluctuating risk. It has to contract business and return to the main garment industry.

epilogue

In recent years, YOUNGOR has been fighting for real estate, finance and other fields, and the profit rate of textile and garment industry is not high.

This is also a problem faced by many manufacturing enterprises in China.

Since the beginning of last year, the macroeconomic regulation and control of real estate and the collapse of domestic stock market have made YOUNGOR's diversification strategy suffer heavy losses. The three carriages will no longer exist.

Keyword explanation

Youngor Group

The YOUNGOR group was founded in 1979. After 32 years of development, it has gradually established the business pattern of brand clothing as the main industry, and involved in the field of real estate development and financial investment.

Three carriages

In 1992, he set foot in the field of real estate development.

In 1993, he set foot in the field of capital investment.

Kai Shi was founded in Shanghai in 2008.

Management company, mainly engaged in investment management and consulting.