Cross Border YOUNGOR: Diversification And Reluctantly Return To The Main Business Unknown

Recently, YOUNGOR (600177) issued a notice that the company signed a partnership agreement with Hongyi capital, to set up a partnership in Ningbo Hongyi equity investment, YOUNGOR invested 999 million yuan as a limited partner, Hongyi capital invested 1 million yuan as a general partner, and the main investment areas of partnership enterprises were financial services and real estate mergers and acquisitions.

At present, YOUNGOR's industry has been involved in brand clothing, real estate development and financial investment diversified enterprises.

The proportion of net profit contributed by apparel sector to total net profit decreased year by year, while the real estate and investment sectors showed a trend of growth in performance.

Last year, Li Rucheng, chairman of YOUNGOR, once said "5 years invested 10 billion and recreate a YOUNGOR". But in the face of the main garment industry that still has no improvement, where will YOUNGOR go?

Helpless pluralism

The YOUNGOR announcement shows that the company participates in partnership investment. Its main investment areas are financial services and real estate mergers and acquisitions.

This seems to be in line with the current direction of YOUNGOR's main attack, and whether the YOUNGOR will continue to exert power in the real estate industry in the future, the Chinese Times reporter called the YOUNGOR securities representative to interview the mail.

YOUNGOR's three quarterly report in 2017 showed that the company achieved operating income of 7 billion 383 million yuan, down 29.81% from the same period last year, and net profit of 2 billion 678 million yuan, down 19% from the same period last year.

For the decline in net profit attributable to shareholders of listed companies, YOUNGOR said that the main reason was that the real estate sector achieved operating income of 4 billion 105 million 675 thousand and 200 yuan and net profit of 785 million 979 thousand and 100 yuan, which was 44.76% and 35.28% lower than that of the same period last year as a result of the carry over projects.

YOUNGOR was founded in 1979 and landed on the Shanghai stock exchange 19 years ago.

In recent years, YOUNGOR has been moving across borders to real estate and financial investment. These sideline businesses are becoming the main source of YOUNGOR's revenue.

Trapped in the main business recession, YOUNGOR is trying to diversify its performance and gradually focus on the development of real estate, finance and other investment businesses. The original clothing industry has become a sideline.

According to YOUNGOR announcement, in 2016, the company used 8 billion 381 million yuan of idle funds to buy financial products.

In 1992, YOUNGOR began to set foot in the development of real estate, and developed various properties such as residential, villas and business buildings in Ningbo and Suzhou.

After 2004, YOUNGOR embarked on the road of rapid expansion of real estate, and frequently paid high prices in the Yangtze River Delta and became the local "king of land".

But YOUNGOR's real estate business is not smooth sailing.

In the environment of tightening macro-control of real estate, YOUNGOR was caught in a sales predicament because of its high cost.

In June 2013, YOUNGOR returned two land to the government, resulting in a 484 million yuan deposit.

It is worth noting that if it was not YOUNGOR's diversified investment in recent years, it was hard to resist the "cold" of the clothing industry.

According to the results of the earnings report, there are 2385 YOUNGOR brand outlets, representing a decrease of 169 compared with the beginning of the year, with a business area of 394 thousand and 900 square meters, an increase of 13 thousand and 300 square meters compared with the beginning of the year.

Among them, 551 self operated outlets, 38 lower than the beginning of the year, 141 shopping center outlets, 38 more than the beginning of the year, 1393 shopping mall outlets, 111 lower than the beginning of the year, 300 franchised outlets, and 58 fewer than the beginning of the year.

Unknowns of regression

Although YOUNGOR diversified investment to enhance its performance significantly, but according to the financial report, from 2014 to 2016, YOUNGOR achieved revenue of 15 billion 903 million yuan, 14 billion 527 million yuan and 14 billion 895 million yuan respectively, with net profit of 3 billion 162 million yuan, 4 billion 371 million yuan and 3 billion 685 million yuan respectively, and the net profit of YOUNGOR fluctuated considerably in the past three years.

In fact, YOUNGOR looks forward to returning to the clothing industry.

At the end of last year, Li Rucheng issued the declaration of "reinventing YOUNGOR in five years", reconstructing the brand advantage, implementing the supply side reform and pforming the business mode.

YOUNGOR said it will return to the main garment industry in the next five years, and will invest 10 billion yuan to enhance the fabric, craft, brand and enhance sales channels.

At present, YOUNGOR has YOUNGOR's main brand and MAYOR, Hart Schaffner Marx, GY, HANP four big sub brands.

Last year, YOUNGOR also hired Giorgio Armani designer and Taiwanese Gong Naijie as the company's design director.

A senior journalist from the clothing industry told the "China Times" reporter that the way to optimize channels and invite designer is only to add additions on the original basis.

For the old brand like YOUNGOR, the minds of the new generation of consumers have not been opened, such as the rejection of the mind of consumers.

YOUNGOR should integrate different styles of brands instead of relying on old brands to shine the second spring.

In fact, as early as in July 2012, Li Rucheng has publicly stated that the company will return to the main business of clothing, and strictly control the investment in real estate, adjust the scale of investment, and concentrate resources to invest in brand clothing.

But in recent years, YOUNGOR's return to its main business has not yet achieved significant results.

In this regard, the China Times reporter wants to hear the corresponding views from Li Rucheng, but has not received any response before the deadline.

According to the Research Report of Chi Chi, the speed of mergers and acquisitions in the industry is accelerating.

Either large enterprises or small micro enterprises will be faced with the fate of mergers and acquisitions.

Therefore, the brand pattern of garment industry presents dumbbell type.

In addition, the above clothing industry veteran said that the current consumer sentiment is becoming more and more diversified, resulting in a lot of domestic suits market performance decline, such as news birds (002154), Luo Meng and many other brands have disappeared.

An investor told the "China Times" reporter that he was not optimistic about YOUNGOR's efforts again.

First of all, consumers are very mature and their management team's thinking has been weakened.

At present, the demand of consumers is quite different from that of consumers many years ago.

Old brands have been weakening, and consumers in the new era will not readily accept these old brands.

It is very difficult to educate a market and conform to a market. Every brand has its periodicity. Large enterprises need to rely on capital advantage to take the new brand and team back into the industry through mergers and acquisitions, so that the integration of talents is the most important.

Author: Blade