Profit Will Be Affected By The Decrease Of Investment Income, And The Net Profit Of Modern Avenue Will Go Up.

To run the advanced men's clothing and make a pition in recent years

After the announcement, the Shenzhen stock exchange's "inquiry letter" on its semi annual report was received.

This shows that its operating income has increased year by year, and the specific reasons for net profit and net cash flow net decrease in operation activities and the decline in performance of M & A projects are explained.

In September 18, 2018, the modern Avenue announcement made a reply to the inquiry letter.

Affected by the decrease in investment income, net profit after deduction will rise to an increase year by year.

Performance continued to decline

Modern Avenue was founded in 2002, formerly known as the card slave Road, is a local senior men's clothing company, in February 28, 2012 on the Shenzhen Stock Exchange SME board.

In 2015, the card road road launched the electronic business platform modern Avenue.

The brand social platform was renamed "modern Avenue" in 2016.

Its own brands include the card road, CANUDILOH HOLIDAY, buyer shop 01MEN and DIRK BIKKEMBERGS. At the same time, it has many international brands such as HUGO BOSS, Burberry, Ferragamo, Estee Lauder, and so on, and owns real terminals such as department stores and airport independent brand shops.

The performance of modern Boulevard reached its peak in 2012. The revenue of modern Avenue reached 636 million yuan, an increase of 37.86% over the same period last year.

Net profit of 177 million yuan, an increase of 61.72% over the same period.

But the performance of modern Avenue continued to decline.

In the past 2013-2016 years, the operating income of the modern Avenue was 799 million yuan, 700 million yuan, 724 million yuan and 754 million yuan respectively, corresponding net profit was 149 million yuan, 15 million yuan, 10 million yuan and -2.87 billion yuan respectively, and the net profit declined by 15.56%, 90.01%, 31.54% and 31.54% respectively.

It experienced a huge loss of 287 million in 2016. In 2017, morden Avenue sold a controlling subsidiary with a deficit for many years.

The company has a 53% stake and has gained nearly 100 million yuan of investment income.

In 2017, the performance dilemma of modern Avenue was alleviated. In 2017, the company achieved a revenue of about 921 million yuan, up 22.16% over the same period last year. The net profit attributable to shareholders of listed companies was about 135 million yuan, up 146.94% over the same period last year.

In 2018, according to the 2018 annual report of the modern Avenue, the company achieved a revenue of 644 million yuan in the first half of 2018, an increase of 40.23% over the same period last year, but the net profit attributable to the listed shareholders was 52 million 690 thousand and 400 yuan, a decrease of 49.96% compared with the same period last year, and the net cash flow generated by business activities was -8387.43 million yuan, down 730.55% from the same period last year.

As revenue rose 40.23%, net profit fell by 49.96%, cash flow dropped by 730.55% and so on. After the announcement of the semi annual report, the Shenzhen stock exchange received the "inquiry letter" about the semi annual report.

Modern avenue for the Shenzhen Stock Exchange's inquiry, explained that the company's operating income rose year after year and net profit decline is mainly due to the sale of controlling subsidiaries in March 2017 and Cafu (Hengyang) commercial plaza limited equity investment income of 98 million 813 thousand and 200 yuan, after deducting the impact of the non normal profit and loss, the reporting period net profit rose year on year.

The net decrease in net cash generated by business activities was mainly due to the increase in the number of agency brands and Internet inputs during the reporting period, resulting in an increase in cash payments due to operating activities.

Merger and pformation platform for e-commerce

Because of the poor performance of men's clothing business, modern Avenue began to seek pformation.

In 2015, modern Avenue launched its own electronic business platform -- the modern Boulevard global fashion brand social platform, but with little success.

Since then, like many listed companies seeking pformation, modern Avenue has embarked on the road of mergers and acquisitions.

In October 2016, morden Avenue acquired 490 million stake in Yuenan 100% by issuing shares and paying cash.

At the same time, the company raised matching funds 230 million yuan.

Yuet Ran's main business is the development and operation of mobile Internet application technology.

In 2016, morden Avenue raised 852 million yuan to invest in the O2O project of the fashionable buyer shop and acquired the equity of LEVITAS S.P.A.51%, owner of Dirk Bikkembergs, Italy's top fashion brand.

However, the road to M & a pformation is not smooth. According to the semi annual report in 2018, LEVITAS.S.P.A. lost 17 million 743 thousand and 500 yuan in the reporting period.

In the inquiry letter of the Shenzhen Stock Exchange, we asked the modern avenue to analyze the reasons and reasonableness of LEVITAS.S.P.A.'s current business scale, operation and profitability in line with the investment expectations.

In response, the modern Avenue replied: "during the reporting period, the LEVITAS S.P.A. of internal control companies made more input in brand maintenance, brand promotion and market publicity, making the brand influence and popularity further improved. However, due to the unexpected impact of the ZEIS group's financial difficulties in the footwear licensing business, the loss in the reporting period was -1744.35 million yuan, which is not in line with our company's investment expectation for the acquisition of LEVITAS S.P.A. equity.

However, this effect is not sustainable. At present, LEVITAS S.P.A. has issued a notice of cancellation of the licensing agreement to the ZEIS group, and has launched the selection and evaluation of the new footwear operators worldwide, while increasing the agreement on products localization in Greater China, replacing the import agreement. It is expected that after the new licensing agreement is signed, the footwear products will be restored to the market and will substantially increase the sales scale and sales profits of the Greater China region, bringing the expected return on investment to the company.

After the semi annual report of the modern Avenue, in September 9th, Everbright Securities issued a research report that the valuation of modern Boulevard was high in the short term, maintaining its "neutral" rating, and suggesting the risk of shareholder reduction, improper merger and acquisition, weak terminal consumption, and less than expected Internet business development.