Lining Is Facing Serious Challenges And Restructuring Is Not Optimistic.

Yesterday, Lining and his family group held two Hong Kong listed companies extraordinary China and Li Ning Co Ltd announced a restructuring plan - extraordinary China plans to buy about 25.23% stake in Li Ning Co and two foreign companies under Lining and his brother Li Jin, making a price of HK $1 billion 359 million. After the completion of the paction, China will become the largest single shareholder of Li Ning Co.

However, the paction is not optimistic about the market.

Two after the company's equity changes, the fundamentals are still hard to improve.

China becomes an integrated platform

The announcement shows that 42.6% of the purchase price of 1 billion 359 million yuan will be

China issues share payment, and the 57.4% is paid by convertible bonds issued by the company.

After the completion of the paction is expected, Lining and his family will enjoy an extraordinary China's rights and interests from 55.88% to about 70%.

Chen Ning, executive director of extraordinary China, said that as a comprehensive platform, China will hold more sports related resources and promote the business and resource advantages of the extraordinary China and Li Ning Co.

Yesterday, Li Ning Co shares opened up and closed down 4.76%, while the extraordinary China soared, the highest rise of 132.3%, closing up 84.62%, but the closing price was only HK $0.12.

CICC is not optimistic about the synergy between the two companies at the operational level, mainly because Li Ning Co is a well-known sports brand clothing and accessories company in China, while the outstanding China is mainly committed to athletes and sports events management and property development.

In the research report, CICC pointed out that the paction provided an umbrella for Lining himself, because Lining would become an indirect shareholder of Li Ning Co, and the financing activities and related legal responsibilities involved by Li Ning Co in the future will be borne by the extraordinary China first.

At the same time, CICC believes that the complex trading structure can not improve the fundamentals of Li Ning Co.

Facing multiple challenges

In fact, the Li Ning Co has been having a hard time in recent two years.

In 2010, Li Ning Co announced that it had reshaped its brand plan and changed its advertising slogans and brand identities.

However, in the past two years, this change has been regarded as a failure by the industry, making the Lining brand not only lost its original core consumer group, but also failed to attract "after 90" to become its target customers.

In September, the Li Ning Co announced that it had closed its store in Hongkong, which was once seen as a bridgehead for Li Ning Co's overseas development, which may mean that Lining's overseas business has stopped.

In addition, the internal management problems and the dealer system are also facing many problems.

A staff member who resigned from the Li Ning Co told reporters that "Mr. Lining is more trusting of professional managers and has long neglected the management of the company."

For the volatile Li Ning Co, the most important task at present is perhaps to stabilize the army.

Since the introduction of private equity TPG in March this year, the Li Ning Co has made a series of drastic reforms. The changes in the company's top level are particularly noticeable. In July 4th, Zhang Zhiyong, the former chief executive officer (CEO), resigned. In October 12th, executive director and chief financial officer (CFO) Zhong Yiqi resigned and became effective in November 1st.

It is understood that before the appointment of the new chief executive, Li Ning Co has been the helm of the founder and executive chairman Lining himself.

In the first half of, the net profit of Li Ning Co was only 44 million yuan, a sharp decrease of 84.9% compared with the same period last year, and the income decreased by 9.5% compared with that of the company.

The problem is also worrying, which is undoubtedly a great challenge for Lining.