Lining'S Future Of Diversification Is Not Good.

Since its listing in Hongkong in 2004,

The company's performance continued to grow. In 2009, it reached its peak and became the representative of China's sports brand.

But since 2010, the recession has caused the company's performance decline, high inventory pressure, brand decline and high level personnel turbulence. Li Ning Co has begun to go downhill.

Recently, 25% of the shares have been sold to related companies, which means that Lining may enter the real estate industry again.

Lining, who has lost the leading position in sports brand, is hard to break through a new world in the real estate market under severe regulation.

Better implement capital operation or re-enter the real estate industry

Lining announced 17 days,

Has agreed to acquire 266 million shares of the company, accounting for about 25.23% of the issued share capital of the company, making a price of HK $1 billion 359 million.

This is the first cooperation between the two companies since last year's extraordinary China acquisition of Lining.

The extraordinary Chinese acquisition of Lining shares is "empty handed White Wolf". Its purpose is to expand the extraordinary China rapidly and develop the mainland's real estate business backdoor.

This means that Lining may enter the real estate industry again.

In April 2010, through super cheap subscription of energy saving (later renamed the extraordinary China) preferred stock and convertible bonds, Lining brothers won a 80% stake in quick energy saving at a price of about 700 million yuan, and energy saving became a platform for Lining to operate in the capital market besides Li Ning Co.

In August 2010, Lining announced that it had injected about 31% of its Li Ning Co shares into China, while buying Shenyang Industrial Park and eco city project. It plans to enter the real estate industry and integrate sports and real estate.

Since then, the HKEx has ruled the extraordinary Chinese takeover of Lining as "anti takeover". On that day, the market value of Lining's stock shrank by about 3000000000.

At that time, although the company expressed appeal, but the acquisition ended in the end.

Lining dreams of breaking into real estate for the first time.

Early introduction of private equity dilution of Lining shares

In January this year, the Li Ning Co announced that it would issue five year convertible bonds with a total capital of 750 million yuan to the TPG and GIC of the US private equity fund.

The shareholding structure of the company shows that after the conversion of convertible bonds, the Lining share held by Lining, the largest shareholder, will be diluted from 30.803% to 27.678%.

Sharp decline in performance, leading position of domestic sports is not

Turning the vision back to 2004, Li Ning Co, which just listed in Hongkong, is enjoying its best days.

In 2008, at the Beijing Olympic Games, Lining lit the torch and became the focus of global attention. It also pushed the company's marketing to the top. In 2009, the sales in the mainland market surpassed Adidas for the first time.

But in recent years, after the high-level personnel turmoil, the company's performance has dropped sharply and share prices have dropped sharply. Lining's sports brand leader is no longer in sight.

Lining's main business has been surpassed by his rivals.

Compared with last year, most sports brands declined in the first half of this year due to the unsolved inventory pressure, the growth of the market and the reduction of orders. In the six domestic brands, Lining's net profit fell the most.

Lining's interim results show that business income in the first half of this year decreased by 9.5% to 3 billion 880 million yuan, and net profit fell 85% by only 44 million yuan. The income and net profit were far less than that of Anta.

In 2011, in the case of a year-on-year decline in revenue, the administrative expenses of Li Ning Co increased by 16% to 717 million yuan over the same period, and the distribution cost increased by 15.9% to 2 billion 910 million yuan over the same period.

And Anta, which has little difference between revenue and Lining, has a distribution cost of 1 billion 450 million yuan and an administrative expenditure of 373 million yuan, all about half of the Li Ning Co.

Thus, in terms of cost control, Lining and his peers already have a big gap.

Sports brand encountered winter high level personnel turbulence

Since the introduction of TPG, a private equity firm this year, as a strategic investor, Li Ning Co has made a series of drastic reforms, of which the changes in the company's top level are particularly noticeable.

Following the resignation of CEO Zhang Zhiyong 3 months ago, chief financial officer and company secretary also resigned recently.

Key positions such as CEO and CFO are still vacant, and the market is expected to see more personnel changes in the future. It will take time for company management to take the right track.

"Left hand down right" market is not optimistic.

From the result of "voting with feet", the pessimistic interpretation of the paction is more common.

On the 17 day, Lining shares opened up to HK $0.05, up to HK $4.91 / share.

From then on, we rushed to the bottom.

At the close, Lining's share price was HK $4.6, or 4.76%.

Real estate and finance are not working properly.

At present, the performance of Li Ning Co is gradually declining. Lining's personal investment behavior is not working properly.

Great march into real estate is not appropriate.

Enterprises, especially the famous brand enterprises such as Lining.

Because its gross profit margin never loses to real estate enterprises, according to Lining's earnings report, the gross gross profit margin can reach 47%, and the gross profit rate of real estate business is generally 30%-40%.

Good sports brand is the root.

In the increasingly fierce competition within the sports brand, the real way out for Li Ning Co whose main performance is slumping is no longer the capital operation and the entry into the real estate industry of the "left-handed right-handed" capital. Instead, it focuses on core businesses, improves operational efficiency, improves net profit margins, recapture the leading domestic position, and even break through the world sports such as Nike and Adidas.

The pressure of tycoons to recreate the brilliance that surpassed Adidas during the peak period of that year.

Conclusion

As a leading sporting goods leader in the mainland, Li Ning Co expects to see a sharp drop in profits this year.

At this time, capital Teng Teng, once again enter the real estate may be difficult to change the status quo of weak growth.