Crazy To Play 300 Billion Won Won The Acquisition Of XTEP International To "Win" The United States Tennis Shoes Brand

According to foreign media, local fashion and sporting goods business XTEP International Holdings Limited (hereinafter referred to as XTEP International) is acquiring Korea's clothing brand.

E-Land will sell its K-Swiss, a shoe manufacturing company in California, to XTEP International Holdings Limited (1368.HK).

The scale of the paction is about 300 billion won (US $268 million 100 thousand), and XTEP international has decided to buy "gestasi" to enhance its competitiveness in the overseas market.

According to the source, E-Land will sell XTEP's K-Swiss, a shoe manufacturing company in California, USA, to about 300 billion won (US $268 million 100 thousand).

XTEP international has decided to buy "gestus" to enhance its competitiveness in overseas markets.

The first textile network reporter learned that he is a listed company in Van Ness, California, and has been established for more than 40 years.

The company launched the first full leather tennis shoes K-Swiss "Classic" in 1966.

Since its inception, K-Swiss has been rooted in CaliforniaSport, aiming to become the most inspiring and innovative sports brand in the market.

Today, through the combination of TennisHeritage, CaliforniaFit (running, triathlon and fitness) and CaliforniaYouth CaliforniaSports, the company offers several categories of high-performance and fashionable footwear and apparel.

The products of K Swiss mainly include various types, most of the series have men and women styles, and a series of fashion accessories and accessories, such as leisure bags and socks.

Its elegant image is easy to cater for the clothing accessories, not only deeply attracted the noble and elegant fashion family.

More suited to the actual needs of outdoor activities.

As for the selection, design and function of K Swiss shoes, it is also a model of meticulous and elegant expression.

The classic series of leisure sports shoes still retain their original spirit until now. The elegant appearance and quality connotation are impressive.

The reporter had learned that XTEP International announced in March 29th that it would issue 247 million new shares, issuing a price of HK $5.56 per share, a discount of 15% compared to the closing price of the previous trading day, compared with 11.3% of the average price of the first 10 consecutive trading days.

The newly issued shares are equivalent to 9.92% of the total share capital after expansion.

Net income of HK $1 billion 355 million will be used for a potential acquisition.

It is understood that XTEP international will acquire the sporting goods brand is an international sporting goods company headquartered in the United States, the middle and high-end market, including yoga, fitness fitness, badminton and other related sporting goods, which will complement XTEP's current brand portfolio and product mix.

The total cost of the potential acquisition is estimated at about 2.40-2.60 billion (equivalent to HK $18.80-20.40 billion).

Investors are generally puzzled that XTEP international is in a state of net cash at present. Whether it is existing business or recent cooperation with WolverineWorldWide, the introduction of San Kang and Mai Le brand in Greater China is not in urgent need of cash in two respects.

In the XTEP International Conference on the issue of additional issues, the management explained that its purpose is to raise funds for an overseas acquisition.

Although XTEP has plenty of cash, its cash is mainly on shore. Because of the strict regulation of the State Administration of foreign exchange, it is difficult to remit cash to overseas.

XTEP international also does not want to use loans to finance the acquisition, because there are two reasons for this risk: (1) the pressure of huge financing costs; (2) exchange risk.

XTEP's recent share price performance is strong, and management believes that it is a good time to issue additional shares and make full preparations for the acquisition.

According to XTEP international management, XTEP international has been negotiating with many overseas brands, and the US international brand to be purchased will complement XTEP's existing brand portfolio (XTEP main brand, San Kang and Mai LE), and is expected to target consumers in China's second tier cities.

However, too many details have not been provided at this stage.

XTEP will decide on the next move according to the progress of the paction, so analysts believe that this will bring uncertainty for the short-term profits.

According to XTEP international management, San Kang and Mai Le's first store will be opened before the beginning of 2020, and in 2020 the company's goal is to open 30-50 new stores for each brand.

Before that, XTEP international will first sell the products of San Kang and Mai Le brand through the channel of e-commerce.

According to public information, XTEP international is one of the leading sports and sporting goods companies in China. It mainly designs, develops, manufactures and sells sporting goods, mainly footwear, clothing and accessories.

XTEP international headquarters is set up in Quanzhou, Fujian, to produce product processing business (OEM), and has produced many sports shoes products for many internationally famous brands.

According to the financial report, in 2018, XTEP's international business income increased 24.8% to 6 billion 400 million yuan, up from the previous year, which was higher than expected. The main reason is that after the successful strategic pformation of the company, the sales rate has increased to more than 75%, the increase in the order of replenishment orders and the increase in retail sales after the optimization of the stores and the channel optimization. The income of footwear and clothing increased by 20.5% and 32.3% respectively, accounting for 61.5% and 36.4% respectively.

Gross profit margin increased 0.4PCT to 44.3% over the same period last year, mainly due to the increase in the proportion of functional products with high unit price, and XTEP international strengthened the cost control of the supply chain. The gross profit rates of footwear and clothing increased by 0.6PCT, 0.4PCT to 45.6% and 42.6% respectively.

Net profit attributable to the parent company increased by 60.9% to 657 million yuan over the previous year, higher than expected, mainly due to a larger increase in earnings such as financial income, government subsidies and interest income from financial management. Superimposition of the company's impairment of accounts receivable resulted in a decline in general and administrative expenses, and net profit growth was higher than income.

Everbright Securities analyst Li Jie said that with the XTEP international joint international brand to expand the domestic market, multi brand strategy landing.

In March this year, XTEP international announcement and WolverineGroup set up a joint venture to expand the two major brands of Saucony (Saint John's) and Merrell (Merrell) in mainland China, Hong Kong and Macau. In the 2018 fiscal year, the number of units in the above two brands decreased and the number of units increased.

Saucony and Merrell will enrich the company's current product matrix, supplement high-end professional shoes and mountaineering outdoor segmentation products, and enhance the company's professional sports brand image.

In terms of business synergy, the above two brands will expand XTEP International's industrial resources at the channel end and the supply chain side, accumulate international multi brand operation experience, and develop its own team strength; XTEP can provide local market leading channels, marketing and supply chain resources, expand the high-end classic series of shop sales through joint venture, and customize product styles for the Chinese market.

Li Jie expects the joint venture to break even in about 3 years, thereby contributing to profitability.