The Future Of Shanshan'S Listing Or Fading Out Of Its Main Business Is Uncertain

stay Clothing industry Under the overall market downturn, Ningbo Shanshan Co., Ltd. (hereinafter referred to as "Shanshan"), once the "first clothing stock", has quietly stripped off its clothing business and become a new energy listed enterprise. According to the latest 2016 annual report of Shanshan Shares, the net profit of clothing business during the reporting period was 36.2617 million yuan, down 25.39% year on year. In fact, in recent years, the proportion of clothing business in the overall revenue of Shanshan has declined seriously, from 31% in 2014 to 13.5% in 2015, and then to less than 10% in 2016. The increasingly depressed sales performance led Shanshan to divest its clothing business last year. Shanshan Co., Ltd. will integrate its clothing business and be operated by its holding subsidiary, Shanshan Brand Operation Co., Ltd. (hereinafter referred to as "Shanshan Brand Company"). At the same time, Shanshan Co., Ltd. plans to list on the Hong Kong Stock Exchange with Shanshan Brand Company as the main body. Industry insiders analyzed that the clothing business, as a sector "abandoned" by Shanshan Shares, has a poor market share at present. In addition to the overall downward trend of the clothing industry, even if the clothing sector can be successfully listed in Hong Kong shares in the future, the development of "money prospects" is not optimistic.

According to the 2016 annual report released by Shanshan, Shanshan Shares The operating revenue was 5.475 billion yuan, up 11.09% year on year, and the net profit attributable to shareholders of the listed company was 330 million yuan.

Among them, the clothing business that once made "Shanshan" famous declined again in the share of Shanshan. According to the 2016 annual report of Shanshan Shares, during the reporting period, the main business income of clothing business was 524 million yuan, and the net profit attributable to shareholders of the listed company was 36.2617 million yuan. Although the clothing business revenue rose 8.72% year on year, it still showed a downward trend in the overall performance of Shanshan, accounting for less than 10% of the overall revenue of Shanshan in 2016.

In fact, in recent years, clothing business accounts for less and less of the overall operating income of Shanshan Co., Ltd. In 2012, clothing business accounted for 47.98%; In 2013, the proportion changed to 42.65%; In 2014, the proportion of clothing business decreased to 31.35%; In 2015, this figure dropped sharply to 13.5%.

Looking through the annual report of Shanshan Shares in recent years, the reporter found that the proportion of clothing business in Shanshan Shares has been declining, not only because the company's lithium battery new energy business has developed rapidly, but also because the business income of the clothing sector itself has continued to decline in recent years.

In 2012, the clothing business achieved a revenue of 1.802 billion yuan and a net profit of 8.5 million yuan, down 85.6% year on year; In 2013, the clothing business suffered losses, with a net profit of -5529100 yuan; In 2014, the clothing business sustained losses, with a net profit of -4173900 yuan. In 2015, the main business income of the clothing business was 581 million yuan, down 49.32% year on year. Although the loss finally turned to profit, this was mainly due to the spin off of the knitwear business.

In 2016, although the clothing business was profitable again, with a net profit of 36.2617 million yuan, the clothing business itself did not achieve a substantial improvement. At present, there are 4 brands in the clothing business, and FIRS revenue increased by 0.67%, reaching 424 million yuan, but the gross profit margin decreased by 2.8% year on year; The revenue of brand SHANSHAN increased year on year, but only 34.4 million yuan, accounting for a small proportion in the clothing business; In addition, LUBIAM and MARCO The revenue of AZZALI brand fell by 20% and 15.13% year on year respectively.

In an interview with reporters, Shanshan said that it would not rule out the possibility of abandoning the two brands LUBIAM and MARCO AZZALI in the future.

At the same time, the clothing business of Shanshan Co., Ltd. closed 140 stores in 2016, with an average store efficiency of 910000 yuan, down 17% year on year. As the main sales channel of clothing, franchise stores closed 326 stores in 2016, with a decline of 22.52% in revenue and 6.25% in gross profit margin.

Fade out of main business

Zheng Yonggang, the founder of Shanshan brand, said publicly that "the era of making money by clothing has passed", which may be the fundamental reason for the poor performance of Shanshan's clothing business for many years.

Ma Gang, an independent clothing commentator, said that the clothing sector of Shanshan shares has an aging brand, which requires the company to increase investment, carry out brand marketing to stimulate market consumption, and inject fresh marketing points, otherwise the brand will continue to be unpopular with consumers. On the whole, although Shanshan put its clothing business behind its lithium battery business in its 2016 annual report, in fact, Shanshan has already started its transformation plan.

At present, while developing the lithium battery material business, Shanshan has also begun to gradually divest its clothing business. According to the annual report, in 2016, Shanshan Co., Ltd. implemented an overall restructuring of its holding subsidiary, Ningbo Shanshan Garment Brand Management Co., Ltd. The integrated clothing business mainly includes Shanshan clothing brand business and other brand businesses, which are managed by Shanshan brand company in a unified way and listed separately on the Hong Kong Stock Exchange with it as the proposed listing subject. At present, Shanshan brand company is still in the stage of feedback on the listing review of the Hong Kong Securities Regulatory Commission and the Hong Kong Stock Exchange. After that, Shanshan will completely bid farewell to the clothing industry and transform into a new energy listed enterprise.

The future of listing is uncertain

Although Shanshan brand company will be listed in Hong Kong stock market, combined with the continuous decline of clothing business in recent years, the action of stripping clothing business is interpreted by the industry as "throwing off the burden". According to the analysis of the insiders, the revenue of the clothing business has been declining in recent years, and there has been a loss before. For Shanshan, this business may become a drag on the company in the future. If the clothing business is separated, the performance of Shanshan will be better. In addition, the clothing business of Shanshan brand company is listed separately in Hong Kong shares, which also adds a financing platform for Shanshan shares.

However, in an interview with a reporter, Shanshan said that "clothing is an industry that never goes down, but the company focuses on resources and energy in lithium batteries and new energy vehicles, so it chose to divest clothing business".

Although Zheng Yonggang once expressed his love for clothes, he launched a new clothing brand, SHANSHAN, in October 2015, which focuses on second and third tier cities and targets young consumers aged 28-35, so as to enter the field of affordable fast fashion. At the same time, Zheng Yonggang also said that in the next five years, SHANGSHAN will open 1500 stores.

However, Ma Gang said that the launch of a new brand was a new attempt for Shanshan. After all, the mainstream consumers of Shanshan were older and the brand was aging seriously. New brands and new product lines were needed to support young consumers. However, among young consumers, the brand also has strong competition from brands such as Home of Hailan.

Ma Gang is also not optimistic about the plan to open 1500 new stores. Shanshan mainly adopts the franchise store model, which requires the franchisee to agree with the brand's business philosophy and business logic. However, the main brand of Shanshan is aging, and the franchisee will not choose the brand if it has more choices.

Ma Gang pointed out that even if the clothing business was successfully listed, the clothing business was "abandoned" by Shanshan for many years, and it was not easy to re develop; At the same time, the old brand of Shanshan lacks fresh consumer groups, while the new brand has not yet established sufficient consumer recognition in the market. At present, the clothing business is in a stage of shortage, so it is difficult for the clothing business to achieve good performance in the short term.

In addition, Ma Gang further analyzed that even though the listing of H shares was successful, in view of the poor performance of Shanshan's clothing business over the years brand Whether the company will continue to increase investment in clothing business or only use this company as a "shell" to inject other businesses in the future is unknown.

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