XTEP Stock Pressure Is Not Too Small To Use Three Measures To Save Share Prices

How long has not seen?

What about the brand? The friends seem to remember Nicholas Tse's heroic posture and the "non ordinary feeling" slogan.

Nowadays, it is similar to Anta (02020-HK), Lining (02331-HK), 01361-HK (360 degree) and so on.

The polarization has begun to emerge. What has happened recently to XTEP International (01368-HK), which is almost coming to an end?

Three strategies to save share prices

The beginning of the year began with XTEP's announcement in the morning of January 2nd.

The board of directors of XTEP has decided to use no more than HK $150 million in accordance with the repurchase authority.

Public repurchase shares.

The announcement said that the company has received notice from its chairman Ding Shuibo and several senior management that they have increased their market share and intends to continue to increase their respective holdings in the company.

In addition, the board has authorized the share award scheme to buy shares publicly in the market and hold such shares to be reserved for future share awards in the share award scheme.

From repurchase to high level holdings, and then to the all in one share award scheme, XTEP seems to have begun to pull up its sleeves and prepare for a big fight. Chairman Ding Shuibo started his own overweight plan from December 12th last year, to boost the share price.

According to the world clothing and shoe net, XTEP's stock price in January 2nd was also up to expectations. In early trading, it rose nearly 6%, although it fell back, but the whole day's gain is still 5.25%.

And is the announcement that the stock price pushed up by the continued repurchase and senior executives' holdings plan is XTEP's flash in the pan or a new round of rally?

Inventory pressure is not small.

Although stock price volatility is normal, XTEP's nearly 13% drop in August 24th was due to its performance.

It is no longer a new thing that stock prices need performance as support.

And XTEP's "three punch" will save the share price, but will it help the performance?

A closer look at XTEP's revenue has been on the rise in recent years, while the gross profit margin has also increased, but there has been a slight fluctuation in net profit.

In the 2016 year, the turnover is the highest in recent years and the gross profit margin is good. The net profit is 15.22% lower than that in 2015. The company mainly refers to the increase in gross profit due to the increase in group income and gross profit margin, but at the same time it was offset by the increase in bad debt provision during the year.

In its 2016 annual report, XTEP said it will continue to pform into a sports fashion brand and reintegrate the resources and business focus of brands, products and retail management departments, focusing on improving retail efficiency and improving the profitability of distributors.

From the current earnings report, we can see that the sales cost of XTEP has reached 3 billion 65 million in recent years.

The proportion of staff costs has also risen slightly, while R & D expenditure has accounted for only a small part.

At the end of 2016, the number of accounts receivable was long and the amount of 460 million yuan in stock was more than 398 million yuan in 2015.

In 2016, the domestic sporting goods industry was flourishing, and the fierce competition in the market led to a little difficulty for XTEP to boost sales. In 2017, the profits and profits of the newspaper disclosed in both reports declined, and inventories showed an increasing trend compared with the end of 2016. These pressures forced XTEP to make a choice in the strategic pformation.

Ending three years of rectification

In December 8, 2017, XTEP issued profit police, because the existing products in the sales channel of the repo were produced before 2015, and its net realizable value was estimated to be substantially eliminated. Therefore, it will have a significant impact on the group's 2017 profits.

In the announcement, XTEP pointed out that it is currently expected to use no more than 150 million yuan, and will focus on the full repurchase of all products produced in the pipeline before 2015.

In addition, based on the preliminary assessment of the unaudited consolidated management accounts and the current information of the board of directors for the 11 months ended November 30, 2017, it is expected that the consolidated net profit for the year ended December 31, 2017 will decrease by about 25% to 35% compared with the end of December 31, 2016.

The annual net profit fell by more than 30%, frighten XTEP's December 11th stock price to turn down and drop more than 10% in early trading, almost equaling the 12% decline in August 24th.

As early as XTEP's 2016 Q1 merchandise ordering conference, XTEP launched the 3+ strategy known as the "future change strategy", namely product + sports + Internet +.

The 3+ strategy aims to push the company's products, sales and after-sales services to a new and higher level.

XTEP pointed out in this earnings announcement that this is a one-off action, representing the last step of XTEP's 3 year rectification.

The three year is coming to an end. Will it be worth 150 million if we spend 150 million cleaning up the stock? Will it repeat the mistake that Lining spent 1 billion years and even lose 4 years? According to the 2017 China Daily, the cash flow of XTEP accounts for about 3 billion 421 million yuan, and the impact of 150 million yuan on cash flow is not great.

Lining used to spend 1 billion yuan on inventory, but the condition was only 1 billion 249 million yuan in cash.

Moreover, the reason why XTEP spent a lot of money on inventory is that, since most of the shops have been upgraded to the 6S functional image store, the products purchased and processed before 2015 are more capable of unifying the brand image and making the whole pipeline healthier and more active in selling new products.

Centralized processing of old product repurchases can also speed up the sale and circulation of new products, and with different pipelines under the online line, it will be a good choice to "sell the old and welcome the new".

In addition, since President Ding Shuibo began to increase his holdings since the crash in December 11th, he also introduced the three tactics mentioned in the foregoing. XTEP international stock price is difficult to raise.

Transformation is usually a difficult and painful process. XTEP has not experienced any decline in net profit, fewer stores, and less children than competitors.

Chinese people pay attention to a good start. In the beginning of the year, XTEP released a big move.

But whether XTEP can really return to the "non general feeling" still depends on whether the 2018 pformation results can really open the door to better performance.

More interesting reports, please pay attention to the world clothing shoes and hats net.