PEAK Sports: Decline In Performance, Close Shop, Maintenance Of Capital Platform Is Difficult To Use

Recently,

The withdrawal of sports from the Hong Kong Stock Exchange marks the official completion of the privatization of PEAK sports, and the industry has begun to imagine its return to the A share plan.

The whole privatization of PEAK sports lasted for more than five months.

The whole process seems to be quite smooth in terms of PEAK group.

In November 16th, PEAK group said in an interview with reporters that because the company's share price was undervalued and its performance was declining, it had to privatize.

At present, the company has no plan to return to A shares.

For the delisting of PEAK, Zhang Shule, an industry commentator, believes that financing from the stock market will no longer become the source of PEAK's expansion funds, perhaps indicating that PEAK's own cash flow has been very stable, and can achieve strategic expansion with "one's own strength".

After the completion of privatization, PEAK group had planned.

PEAK group said that in the future, the company will implement more

Strategy, improve the international layout of sports equipment industry, and participate in the operation of sports events extensively to create an international sports ecological circle with international standards.

In October 28th, the Grand Court of PEAK sports registration officially approved the plan of privatization of Peak Sport Products Co Limited by the offeror Xu sports agreement. On the same day, the company's issued share capital and the corresponding issuance of shares to the offeror under the plan were also confirmed by the Dafa.

PEAK sports announcements that the privatization subscriber is a state-owned securities company.

Among them, the capital investment of Everbright Securities amounted to about 150 million yuan. According to the offer of 2.60 yuan per share proposed by major shareholders, the total amount of privatization of PEAK sports circulation shares was about HK $2 billion 500 million.

The whole privatization of PEAK sports lasted for more than five months.

It is understood that PEAK sports issued a notice of suspension on May 23rd, issued a formal announcement of privatization in July 26th, and the October 19th Cayman court meeting and the shareholders' special meeting passed the privatization bill with 99.45% votes in favour. The listing status of the HKEx was officially abolished at 4 p.m. in November 2nd.

After the completion of privatization, private equity agencies such as Doug capital, Everbright, Qianhai parent fund, Guoxin, Guangfa, Minsheng Bank and many other institutions invested HK $2 billion in the restructuring of PEAK sports.

It is understood that in May of this year, with the declining performance of PEAK, forced to start privatization.

In the 5 months of privatization, PEAK did not experience a smooth road.

Because the privatization delisting procedure of Listed Companies in Hongkong market is very complicated, and in Hongkong law, the privatization or capital reorganization of the group needs to be voted by the small and medium-sized shareholders except the large shareholders and the concerted action. The agreed votes must reach 3/4 and there should be no more votes than 1/10.

However, in the view of PEAK group, the privatization process is relatively smooth.

"Premium must follow market principles. At present, the privatization price is fair and the voting process is also very smooth.

At the same time, the company has maintained good communication with the stock exchange, the SFC and the intermediaries, including the financial institutions involved in the privatization investment, which is also very confident in the company.

PEAK sports said in an interview with reporters.

The decline in performance is difficult to maintain.

Public information shows that PEAK sports is a famous sports equipment brand in China. It was founded in 1989 and landed on Hong Kong stock in September 2009 after failing two IPO listing.

But since its listing, its liquidity has been at a low level.

Although the market value of PEAK sports is about 6 billion 100 million Hong Kong dollars, it is in the mainland sports.

Hong Kong stock companies are still in the countdown position.

PEAK's mid term performance report shows that PEAK sports group business income fell 6% to 1 billion 298 million yuan, down 5.6% to 494 million yuan in the same period last year, and net profit attributable to shareholders decreased by 3.8% to 169 million yuan.

In fact, PEAK sports has been flat since its launch.

It is understood that from 2012, PEAK Sports Group annual net profit only maintained at 200 million ~4 billion yuan, and began a large number of stores to maintain cost operation.

"The reduction of PEAK stores is just a representation, the fundamental purpose is to hope that the quality of each single store is even higher."

PEAK group responded to an interview with reporters that before that, the company's channels still had a large number of outlets for early group buying business. The main part of the adjustment was this part of the network. At the same time, the stores with poor image and low quality were also cut down, so they had little impact on the whole company.

By adjusting the outlets, the company will promote the refinement and flattening of the channels, increase more distributors, and develop some prefecture level or even county level agents.

In addition, the cost is rising now, flat management will reduce channel costs and enhance competitiveness.

At the same time, PEAK group also said that in 2010, the sporting goods industry ushered in a period of rapid growth. This rapid growth led to the company's high expectations.

However, around 2010, there was an inflection point in the development of the industry. The growth of market demand did not reach the expected level. However, the company still ordered the dealers to order according to the original high expectations, resulting in the inventory.

This has had a huge impact on share prices and market capitalization.

"This privatization is mainly due to the unsatisfactory performance of the company's share price since its listing. As a leading sporting goods company, the company's share price will affect the reputation of the company, thereby affecting the development of the company's business."

PEAK group said that the investment value of the company has been undervalued for a long time and its circulation is small, so it is difficult for the company to use the capital platform effectively.

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However, Ma Gang, an independent critic of shoe industry, said in an interview with the media that more than 30 Hong Kong stock companies began to plan to privatize their businesses due to the group price impact of domestic and international economic downturn and undervalued value. However, because privatization quotas not allowed by investors have made the privatization of enterprises not smooth, even if the privatization of enterprises is successful, they are also facing the challenge of capital market.

For PEAK sports share price is underestimated phenomenon, Southern China normal university sports industry economics doctor Guo Xiaohao analysis, at present, the mainland stock market is still in "Walking Bear", is in the stock capital game stage, but because of the State Council 46 article as the representative of the policy is good to follow, and sports concept of the stocks are still no shortage of capital operation highlights and continuous hype theme.

In contrast, Hongkong's securities market is relatively low because of its low capital turnover and relatively low turnover.

The overall "water level" is low, and even if there are good concepts that can not be fired, many management companies who choose to go to Hong Kong in the first place think that their enterprises do not enjoy the overestimation of capital market compared with the same type of enterprises listed on the mainland.

Pressure on pformation and upgrading

After the privatization of the future, how to develop the layout, PEAK group said that the company will promote the upgrading of the company from a single sports equipment supplier to the sports industry group through mergers and acquisitions, restructuring, investment, incubation, internal entrepreneurship and other modes. In addition to further strengthening the sporting goods sector, it will also set foot in the sports IP competition construction, operation, sports training, sports big data, sports information and social networking and other fields, and build PEAK sports industry ecosystem.

At present, PEAK is already a leading Chinese sports brand in the overseas market, and its products are sold to more than 90 countries and regions.

In the first half of 2016, PEAK group's overseas sales amounted to 296 million yuan, while overseas markets accounted for 22.8% of the total turnover.

Compared with the same period in 2015, the turnover in overseas markets increased by 12.5%.

In addition, PEAK sports has maintained good cooperation with top international institutions such as FIBA, Olympic Committee, NBA and WTA through many years of industry accumulation.

PEAK group told reporters that the future group will implement multi brand strategy and improve the strategic layout of sports equipment industry internationalization.

At the same time, the group will also upgrade sports training and sports service business, upgrading from purely sports equipment manufacturers to sports industry resource integrators, so as to realize the strategic layout of large sports ecosphere.

According to Zhang Shule's analysis, privatization of enterprise delisting is often a strategy for major changes in enterprise strategy and a strategy to avoid external distress. PEAK sports privatization belongs to this, from simple sporting goods enterprises to the sports industry group it refers to.

In particular, it is quite difficult to turn the event sponsor into a IP manufacturer. It must be rid of the external problems, including the stock price shock caused by the difference between the stock market and the investors' strategic recognition.

Guo Xiaohao said that in the future, PEAK group will also face the difficulty or challenge of pformation, mainly because of its exploration and construction of stable profit pattern.

At present, many industry companies are burning money to occupy the market, but gradually they are in the bottleneck stage. Under the uncertain circumstances of return, how long the mode of burning money can last for long is a common topic before the sports industry companies in the mainland.

For the industry's conjecture about its return to A shares, PEAK group said the company had no plans to return to A shares.

However, in Guo Xiaohao's analysis, PEAK sports will still seek to return to A shares when the timing is ripe, and the relevant national policies have been encouraging mainland sports industry related companies to go public.

There are two ways to return: IPO and backdoor.

If you want to take the IPO Road, PEAK sports first need to complete the required restructuring, financial and other listed declaration programs, and wait in line for the audit.