Liqun Group'S Response To Some Problems Of Enterprises

According to the world clothing shoes and hats net, 1/4 subsidiary is losing money, cross regional operations are out of commission, and cash flow is deteriorating.

As a retail giant in Shandong,

Since last year's A share listing, although it has submitted a brilliant financial report, the multiple problems revealed in its earnings report show that there is a rapid expansion or no hidden danger in the case of obvious internal losses.

In this regard, Liqun group received an exclusive interview with reporters and responded to some of the problems of the enterprise.

1/4 subsidiaries lose money and are insolvent.

From the overall earnings report, Li group's revenue reached 10 billion 600 million in 2017, and its net profit was 395 million.

However, according to the statistics of the reporters, 11 of the 40 subsidiaries of Li group had a deficit last year, and 10 of them appeared to be insolvent.

The loss company is Jimo commercial building limited and Qianhai Qingdao.

Plaza Limited, Zhucheng shopping plaza limited, Wendeng shopping plaza limited, Dongying Ruitai Shopping Plaza Co., Ltd., Qingdao Agel Ecommerce Ltd, Qingdao Liqun convenience chain development Co., Ltd., Qingdao Rui Sun Trading Development Co., Ltd., Pingdu Shopping Center Co., Ltd., Qingdao Jinding Plaza Co., Ltd. and Lianyungang Commercial Plaza Co., Ltd.

Most of them are insolvent.

Some analysts told reporters that the situation of insolvency in high-tech companies, such as semiconductor companies, is a normal phenomenon, but if it appears in the retail business, otherwise it should be paid attention to.

However, in the case of such a high proportion of deficit subsidiaries, Liqun group did not turn losses into a heavy responsibility, but expanded the scale as the focus of operation in 2018.

In its earnings report, he said, "we will take the opportunity of listing as a whole to seek the target of M & A in line with the company's development strategy through the whole country, and achieve the rational expansion in the whole country through wholly-owned acquisition, controlled acquisition and equity participation, and gradually achieve the layout across multiple provinces and regions. In 3-5 years, it will become a comprehensive commercial brand with a high influence in the whole country."

This path of development is common to professionals.

When saturated, enterprises usually need new stores to achieve exogenous growth.

However, from the perspective of historical experience, the blind expansion of external subsidiaries without the loss of internal subsidiaries made it easy for the careless capital chain to break down and drag the company down.

"For commercial chain enterprises, there is a certain proportion of dynamic loss of stores, which is a normal phenomenon. Expansion of scale will expand the channel's right to speak, gain the advantage of commodity prices, and increase the cash flow of operation, which is in line with the characteristics of the industry."

Liqun told reporters that part of the loss company is a newly opened shop, capital expenditure is relatively high, and there is a breeding period of 3 to 5 years, so net profit is negative.

In addition, due to the disposal of inventory assets, the closing of stores due to the reasons for demolition will also lead to loss of statements.

The loss of individual non market companies is caused by normal business adjustment, which has little impact on overall performance and non sustained losses. In addition, some loss stores also show a state of deficit reduction with the cultivation of local markets.

E-commerce losses

Among the above deficit subsidiaries, the Qingdao Agel Ecommerce Ltd is worth talking about.

The company lost about 1 million 790 thousand last year, and its net assets amounted to about -1213 million.

It is reported that the company was founded in April 2008 and is a wholly owned subsidiary of Liqun group, which fully operates the e-commerce business of Liqun group.

The main business of Agel Ecommerce Ltd in Qingdao is divided into two parts: O2O and B2B.

The group was set up by the end of 2016, mainly based on O2O mode, and customers were placed through WeChat public address, autonomous APP and PC web page.

Li group, which was launched in 2017, is a B2B mode. Its main customers are convenience stores and franchised stores, and it also covers fresh food and related materials purchased by hotels, canteens and restaurants.

After Liqun online business platform was launched, Liqun moved all the about 1000000 pieces of its 40 large shopping malls, supermarkets and household appliances from the physical shopping center to the online, which means that the platform relies on Liqun shares, the offline store resources and more than 90% percentage of self owned products. The online shopping mall is not an independent entity. It seems to be an accessory channel for the business under the digestive line.

Li group said that the new online business is in the market cultivation stage, so e-commerce still has losses, but it is also reducing the deficit year by year. The development momentum is good. The company's online sales in 2017 exceeded 400 million yuan, and is in the stage of rapid growth.

In 2018, the company changed its original investment project - "e-business platform upgrading project" to "intelligent supply chain information management upgrading project", and built an intelligent world-class network application and management platform.

The new information management platform will optimize the fluency and convenience of the users and the purchasing platform, enhance customer shopping experience, and promote the leapfrog development of the company's online business and purchasing platform strategy.

Loss of convenience stores

In addition to e-commerce, Liqun holding subsidiary Qingdao Liqun convenience Development Co., Ltd. also lost 450 thousand last year, and its net assets were about -117 million.

According to Liqun official website, Qingdao Liqun convenience store development Co., Ltd. was founded in 2002, and the franchisee has developed from the first few to more than 800 now.

Generally speaking, the franchising business is self financing by franchisees. Joining the headquarters only provides the necessary image, brand, training and management support. The franchisees operate independently and assume legal responsibility independently.

Li group convenience store as a franchise headquarters, the loss is really unthinkable.

In this regard, Li group said that the subsidiary belongs to a small wholesale company for convenience stores, which in 2017 facilitated the development of the company's operating income of 15 million 356 thousand and 800 yuan, joining a small portion of revenue, about 159 thousand and 300 yuan.

The convenience company's original purchase channel is mainly purchased from the company's holding subsidiary, Qingdao Fuxing Xiang Logistics Co., Ltd. in 2018, convenient chain development Co., Ltd. to expand the purchase channel, will increase the direct purchase from producers, introduce a large number of new products, will drive the company's sales increase and profit growth.

In the first quarter of 2018, the company achieved 4 million 957 thousand and 800 of its main business revenue, up 101.83% from the first quarter of 2017.

In terms of community business development, Li said that based on the surrounding market environment and the characteristics of residents' consumption, self-employed + affiliate will develop side by side, while the focus should be on creating a fresh community store with a group of characteristics.

Cross provincial operation is out of commission.

Li, who was born in Qingdao, is not at ease. He always wants to extend his tentacles to the outside of the province.

In 2017, its first large-scale commercial complex outside Lianyungang opened its commercial plaza, which is also one of its investment projects.

Li group defines the opening of Lianyungang commercial plaza as a symbol of going out of Shandong and going to the whole country.

The total construction area of the project is 80 thousand square meters, of which there are 5 floors on the ground and 2 floors on the ground. It covers more than 200 commercial brands including large life supermarkets, fine clothing, home appliances digital, children's entertainment, catering and entertainment, and movie theaters, and has built more than 1000 parking spaces.

As far as site selection is concerned, the project is impeccable.

Lianyungang Commercial Plaza is located in Haizhou District, Lianyungang City, Jiangsu Province, near the Lianyungang municipal government, surrounded by schools and houses, and there is no large commercial complex nearby. This makes the project have adequate passenger flow expectations and no peer competition pressure.

However, it is not optimistic about the operation of the company.

Last year, the company lost a net profit of about 10 million, with net assets of about -26 million, which is insolvent.

Li group said that Lianyungang commercial plaza limited lost its business in 2017, mainly in Lianyungang and opened in September 2017, resulting in the purchase of property, equipment capital expenditure amortization and pre market training and publicity.

"The establishment of Lianyungang Commercial Plaza is the beginning of Li group's expansion of its business outside the province, and is the first step for Liqun to move towards the whole country.

With the development of the market and the support of a strong supply chain system, Lianyungang Commercial Plaza will show a strong growth trend, and business is in line with expectations.

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Heavy assets operation, business risk increase

At present, the company emphasizes light assets operation, but Liqun does the opposite. It always emphasizes self-sustaining property and self employment.

By the end of 2017, Liqun store had an area of more than 1 million 200 thousand square meters, of which its own property area was more than 450 thousand square meters, accounting for 37.93% of the business area of its stores. Its own logistics center has an area of over 280 thousand square meters, of which the cold chain storage area is 38 thousand square meters, and the total operating area of the company exceeds 1 million 480 thousand square meters.

"The uncertainty of leasing property and the rising risk of leasing cost make the company begin to change the role of" two landlord "in traditional department stores and accumulate its own property in order to reduce the cost pressure caused by the rising rental cost.

Liqun side said that at present, there are more private property in the company's stores, which are all the more prosperous commercial areas in the region, and will play an important role in cost control in the future.

At the same time, in the current domestic real estate market environment, the company's own property has a larger value-added space, Future Ltd has a lot of space to make use of the value of its own property through asset securitization, from another point of view, this is also a model of light asset operation.

The next step is in the independent supermarket, the community store, the vertical category straight store and other fields mainly by leasing or cooperative operation.

In the self run mode, Li group adopts an independent procurement mode, which includes appliances, supermarket products, household goods and some clothing, shoes and hats, cosmetics, jewelry and other commodities.

The distribution ratio of electrical appliances and supermarkets is over 90%, followed by cosmetics and clothing, and the distribution rate is over 40%.

Generally speaking, the high proportion of proprietary commodities will increase operational risk and increase operational risk.

Liqun said that it has taken into account the existence of this risk, and revealed that buyout mode is the strategic direction that it has always adhered to. Although there is a higher inventory problem in comparison with the retail enterprises dominated by the same industry, the company's long-term accumulation of supply chain resources and the ability to control wholesale links have great advantages in improving gross margins, saving circulation costs, guaranteeing commodity procurement cost advantages, and improving the terminal's ability to raise prices.

According to the insiders, the management of inventory will be a challenge if the self operated goods are too high.

In this regard, Li group said that through the use of advanced and mature logistics system to inventory automatic management level, effectively preventing the outgoing differences, losses and other issues.

Through the control of inventory, the accuracy of accounts can be monitored in real time, and reasonable orders can be made according to the correct inventory, so as to avoid the imbalance between supply and demand, deal with overdue inventory in time, and speed up the flow of funds.

From positive to negative, cash flow worsens.

Liqun group's parent company report shows that the net cash flow of the group's operating activities is about 179 million this year, compared with a net inflow of 522 million last year and a nearly 700 million difference over the past two years.

In finance, the most direct indicator for judging a company's operating situation is the cash flow statement. The operating cash flow of the group has changed so much, and it has changed to the adverse direction, which reflects the company's business risk to a certain extent.

The reasons for the deterioration of cash flow include many aspects, such as the increase of accounts receivable and the rise of operating costs.

By contrast, a large fluctuation in the operating cash flow of the parent company is caused by the payment of other cash related to business activities, with a period of about 100 million, and this period is about 680 million.

There were no major fluctuations in the remaining three items of cash, namely, the purchase of goods, the cash paid for labor services, the cash paid to workers and workers, and the taxes and fees paid.

"The cash flow from positive to negative is mainly caused by a substantial increase in expenditure on investment activities. In this period, the purchase of fixed assets, intangible assets and other long-term assets has increased in cash compared with the same period. This is mainly due to the purchase of Jinding office premises and the construction of Huangdao and Rongcheng projects. The cash payment for investment has increased over the same period, mainly due to the purchase of financial management during the current period."

"Changes in cash flow," Li explained.

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