Fosun International Investment Folli Follie Seven Years Deficit Five Hundred Million Fashion Layout Is Not Easy

To build an investment Empire, Fosun International In recent years, the business layout is also bigger and bigger. Its investment is spread in many fields, such as insurance, medicine, real estate, steel and so on. Speaking of Fosun international, Guo Guangchang, who is only 51 years old this year, is also legendary and has been called "China's Buffett" by the media.

However, if we want to wear a crown, we must bear the weight. Fuxing international has encountered a lot of trouble recently.

Earlier, a US hedge fund Quintessential Capital Management released a short report on Folli Follie, a jewelry accessory retailer in Greece, claiming that there was a number of fraudulent sales outlets, especially the most important ones. Asian market 。 Then, Folli Follie will be suspended by the Greek securities regulator Hellenic Capital Market Commission (hereinafter referred to as "Greek capital market committee"), and the replacement of a number of board members. However, the crisis faced by Folli Follie continues to spread and is far from over.

According to the latest news from the Greek local media, after a series of financial data and operational data of Folli Follie were audited by the Greek capital market committee, Folli Follie failed to produce relevant documents to prove the amount of cash reserves of 242 million 500 thousand euros, and judged that there was indeed data fraud and manipulation of the market. It demanded that Folli Follie immediately make rectification and pay a fine of $5 million (34 million yuan).

As a pioneering work fashion The first shot of the plate, the significance of investing in Folli Follie for Fosun international is self-evident. Even though Fosun international is always optimistic about Folli Follie, the market is bound to question whether the investment of Fosun international is worth it.

Li Daxiao, chief economist of British securities, said in an interview with "international finance daily" that the Folli Follie suspected of financial fraud is really bad news and will have some impact on investor confidence of Fosun international. However, any investment is risky. Compared with Fosun's overall investment scale, Fosun's investment in Folli Follie is relatively small, so it will not shake the foundation of Fosun. In the future, Fosun international will make an asset impairment on this investment.

Folli Follie involves financial fraud

Official data show that Folli Follie was founded in Greece in 1982 and has achieved unprecedented success at the beginning of the brand, and has been based on a keen insight into global fashion. The idea of Folli Follie is to provide a "complete fashion idea" with a high quality fashion at a reasonable price. jewelry Watches, accessories and accessories brands to meet the needs of modern fashion white-collar women.

According to the previous short report of Quintessential Capital Management, Folli Follie actually has only 289 sales outlets, rather than the 630 sales points of the group's 2016 annual report. And most of the sales outlets of the brand have been closed, and a considerable part of the sales outlets in key areas are small enough to be ignored or are in the process of liquidation. The most shocking thing is that Folli Follie claims that there is a sales point at Shanghai Hongqiao Airport terminal 3, and there is no terminal 3 at the airport.

Tang Xiaotang, a senior retail analyst and founder of the non stylish Chinese network, said in an interview with the international finance daily, "hedge funds do this in the economic interest, but on the other hand, it is equivalent to the role of the civilian police in the two tier market. If the company has no problems, it is not afraid to accept questions."

No doubt, the Folli Follie share price suffered a heavy setback in the report, and Folli Follie was suspended by the Greek capital market committee for questioning the financial fraud. The closing price of a trading day before the suspension was 4.8 euros, and the stock price plunged by nearly 70% in less than a month.

Hao Junbo, an international litigation lawyer, admitted in an interview with the international finance daily that if a listed company deceives investors through financial fraud, investors have the right to claim compensation for their losses through litigation.

In order to verify whether Folli Follie really exists in the case of selling point fraud, according to the Xi'an store address provided by Folli Follie official website, the International Financial Daily reporter visited the Folli Follie SEG shop and bell tower shop not long ago.

When reporters visited, it was discovered that the store had withdrawn. For the reasons for dismantling, the staff of SEG mall only said "due to the expiration of the contract between Folli Follie and the shopping mall". Compared with the next SWAROVSKI, the shop in the century golden flower bell shop is slightly cooler than the next one. When asked about the high tech store, one of the salesmen admitted to the reporter that the hi tech store is only a temporary sales point only. "Folli Follie" is a temporary sales point.

Tang Xiaotang believes that the difficulties faced by Folli Follie in the capital market may not directly affect sales terminals, but it will also indirectly affect consumers. Because the problem of capital chain has a direct impact on the trust of suppliers or department stores, such as suppliers do not supply, department stores do not renew contracts, self withdrawal will happen.

It is noteworthy that, according to the latest news from the Greek local media, it passed through Greece. capital market After examining a series of financial data and operational data of Folli Follie, the Folli Follie failed to produce relevant documents to prove that the amount of cash reserves of 242 million 500 thousand euros was judged to be false and manipulated by the market, requiring Folli Follie to immediately rectify and pay a fine of US $5 million (34 million yuan).

To this end, the "International Financial Daily" reporter called Folli Follie for the first time, China has not been able to connect, and then sent to the Folli Follie official website of China's e-mail address to issue related issues until the reporters did not receive a corresponding response.

Investment Folli Follie lost nearly 500 million yuan in seven years

In Tang Xiaotang's view, the financial fraud and even the fines imposed by the Greek capital market Commission had a greater negative impact on the brand and goodwill of Folli Follie. At the same time, Folli Follie slowed down the pace of investment and expansion to a certain extent, and indirectly affected the purchasing power of the market. Folli Follie's share price plummeted and faced a $5 million fine, making its Fosun international assets shrink dramatically.

It can be said that the establishment of financial fraud charges, in addition to the Folli Follie itself suffered great impact, one of its investors Fosun international or jointly affected.

In May 2011, Fosun international invested 84 million 588 thousand euros to acquire Folli Follie 9.5% stake, and then increased to 13.9% in that year. Fosun international has become one of the largest strategic investors of Folli Follie group and has a board seat.

In the press conference of Fosun International's stake in Folli Follie, Guo Guangchang said with a smile that the brand was bought because his wife liked it. But in fact, Folli Follie, as the first international fashion brand to be established by Fosun, is important to Fosun.

After the short sale, in May 17th, Fosun International announced that the company had sent a letter to Folli Follie and urged interested parties to clarify the facts as soon as possible. Because of its trust in its large shareholders and management, Fosun also increased its holdings of Folli Follie shares, thereby increasing its shareholding ratio to Folli Follie from 13.9% to 16.37%.

Now, for Folli Follie suspected of financial fraud has been identified by the Greek capital market committee, whether Fosun international has known and how it intends to deal with this investment in the future, Fosun international responded by saying: Fosun has been concerned about the relevant penalties issued by the Greek capital market committee recently to Folli Follie company and several executives. Since the incident, Fosun has hired external lawyers, and has organized an internal expert team to closely track and deal with this matter, and actively protect the interests of Fosun and related parties and shareholders. Fosun will continue to pay attention to the progress of this matter, urge relevant parties to provide instructions as soon as possible, and actively seek assistance from various channels to properly resolve the matter.

So what is the benefit of Fosun International's investment in the 7 years of investing in Folli Follie?

In terms of financial performance, Folli Follie's operating income and net profit in 2011 were 1 billion 21 million euros and 90 million euros respectively.

In 2016, the company's operating income and net profit were 1 billion 337 million euros and 223 million euros respectively; in the first three quarters of 2017, Folli Follie achieved operating income and net profit of 1 billion 41 million euros and 135 million euros, respectively, up 8.8% and 20.2% respectively over the same period last year.

On the surface, the profit level of Folli Follie has been increasing in recent years, but the authenticity of its annual report is not yet confirmed.

From the perspective of stock gains, in May 2011, Fosun international invested 84 million 588 thousand euros to acquire Folli Follie 9.5% stake. Folli Follie annual report shows that the company's total share capital is 66 million 948 thousand and 200 shares. From this calculation, the price per share of Fosun International's acquisition of Folli Follie 9.5% is about 13.3 euros.

According to the 2011 Annual Report of Fosun international, due to a sharp fall in the share price of Folli Follie during the reporting period, the company's shareholding ratio of Folli Follie increased to 13.9%.

It is speculated that the price of Fuxing international holdings should be less than 13.3 euros. In the 6-12 month of 2011, the price of Folli Follie changed within the range of 6.5-11.5 euros, which also confirmed this speculation on the side.

At present, Folli Follie has been suspended by Greek capital market committee for being questioned about financial fraud. The closing price of a trading day before the suspension is 4.8 euros.

Assuming that the price of Folli Follie is increased to 9 euros (intermediate value) after the Fosun international, it does not calculate 2.47% of the holdings in May this year. After the Folli Follie was invested in 2011, the investment income of Fosun international is about -6643.28 million euros.

It is worth noting that in the seven years of Fosun international holding Folli Follie, Folli Follie paid dividends in 2014 and 2015 with a total dividend of about 0.95 euros per share. At that time, Fosun international held about 9 million 300 thousand shares, with a dividend of about 8 million 840 thousand euros.

Therefore, the total investment income of Fosun international in Folli Follie is about -5759.28 million euros, equivalent to about -4.56 billion yuan.

Fosun international power expands fashion layout

In fact, in addition to Folli Follie, Fosun international has invested a lot in other fashion brands.

To this end, Fosun international has also established Fosun fashion group. According to Fuxing international official website, Fosun fashion group is committed to managing Fosun's current fashion related asset business, including Lanvin, Wolford, St John Knits, Caruso, Tom Tailor and looking for opportunities to invest in all kinds of global flagship brands.

However, compared to medicine, real estate, steel, mining and other heavy asset sectors, Fosun's investment layout in the fashion industry started late. It was not until 2011 that Fosun international was invested in Folli Follie.

Two years later, Fosun international has cast its eyes on the US on the other side of the ocean.

In April 2013, Fosun international became the St of the senior women's clothing brand in the United States. The second largest shareholder of John. Fosun international indirectly holds St. John 6.7% has a 27.2% stake in a company's equity fund.

In September 2013, Fosun gained the Caruso 35% stake in menswear in northern Italy by increasing capital and expanding shares. Fosun international has an indirect interest in Caruso 5.95%, which owns a 29.05% stake in the company. In addition to producing private brand men's clothing, Caruso is also a brand of Dior and Lanvin. Senior men's wear OEM.

In July 2014, Fosun international purchased the German fashion brand Tom Tailor 23.16%.

In 2017, Fosun international increased its holdings of Caruso and Tom Tailor.

In February 2018, Fosun international spent 120 million euros on the French luxury brand Lanvin. After the completion of the spanaction, Fosun international will become the controlling shareholder of Lanvin.

In March 2018, Fosun also spent 55 million euros on the acquisition of Austria high-end underwear brand Wolford 2 million 543 thousand and 700 shares, which is equivalent to 50.87% of the total share capital.

According to the 2017 annual report, the effective rights of Fosun international holding Folli Follie, St John, Caruso and Tom Tailor are 13.89%, 13.79%, 48.67% and 25.01% respectively.

At this point, Fosun International fashion Investment in assets has covered men's wear, women's wear, bags, accessories and other fields throughout the United States, France, Germany, Italy, Greece, Austria, these 6 European and American countries.

Among the six top fashion brands held by Fuxing international, besides Folli Follie's listing in Athens, there is also a German listed company, Tom Tailor.

In terms of financial performance, in 2014 -2017, the operating income of Tom Tailor was 932 million euros, 956 million euros, 969 million euros, and 922 million euros respectively, with net profit of 10 million 752 thousand euros, 71 thousand euros, -7300 million euros, 17 million 55 thousand euros, and net profit in the four years amounted to -4512.2 million euros.

It can be found that Tom Tailor's profitability in recent years is not stable.

From the perspective of stock gains, in July 2014, Fosun international acquisition German fashion Brand Tom Tailor 23.16% equity.

Fosun International did not disclose the trading price when it entered Tom Tailor in 2014, when its share price was about 13-14 euros per share. As of press release, Tom Tailor's share price is about 7.1 euros.

In this sense, Fosun International's investment in Tom Tailor also failed to make profits or even lose money.

As for the other 4 fashion brands, because no listing, Fosun International did not disclose its earnings separately in the annual report, so it can not know its investment income temporarily.

Li Daxiao thinks that the proceeds of equity investment to listed companies are usually calculated by the stock price of the listed companies, while the cost of equity investment to non-listed company is evaluated.

Lv Suiqi, a professor at the school of economics, Peking University, looks at the fact that enterprises generally choose a good M & a target from the following aspects: first, whether the industry in the target company has reliable growth and whether it is in line with the current trend of technological development; secondly, the target company is industry Location, if the market share of the target company is high and the discourse power is large, the company will be more acquired value. Finally, the company's performance and growth, the company's management team and ownership structure are also important assessment factors.

Lv Suiqi further stressed that for overseas investment, enterprises must also consider political risks and legal risks.