YOUNGOR Forty "Puzzled": Lengthen The Real Estate Front, The Main Garment Industry Is Difficult To Shoulder Heavy Responsibilities.

YOUNGOR, who announced its return to garment industry in a high-profile year, has also become active in the real estate sideline industry.

In May 30th, Zhejiang and Ningbo continued to make 5 sites. After winning 317 rounds of competition, Ningbo Yinzhou District block YZ13-02 was captured by Nan yuan (Ningbo) Real Estate Co., Ltd. the total paction price was about 2 billion 10 million yuan, the floor price was 15000 yuan / square meter, and the premium was 35.99%.

Data from heaven eye show that the current shareholders of Nan yuan (Ningbo) are An Tao (Ningbo) Electric Appliance Co., Ltd. and Ningbo Jiangshan Wanli Real Estate Co., Ltd.

A person close to YOUNGOR revealed to the times finance that the block was first taken by Nan yuan (Ningbo) estate. After the land was officially acquired, YOUNGOR would become a shareholder in the form of financial investors, holding 50%, but it would not be listed on the listed company.

On the Ningbo block, YOUNGOR has harvested 6 plots this year.

Prior to February 21st, YOUNGOR won 388 million plots of three plots of czhe River in Cixi. In March 1st, YOUNGOR spent 454 million yuan to win the two plot of Qilihe District, Lanzhou City, Gansu province.

YOUNGOR's real estate is still expanding, and YOUNGOR travel Holdings Limited was formally established in May 23rd. The company is responsible for coordinating the operation of hotels, tourism, health and pension assets. It will become an important platform for YOUNGOR to try to pform in real estate business.

While the real estate business is pulling the line, YOUNGOR will withdraw from its most profitable investment business.

In April 30th of this year, YOUNGOR announced that it would adjust its development strategy of "three carriages" (clothing, real estate and investment) for 11 years, and the investment business would be stripped.

After this adjustment, YOUNGOR will refocus on the main garment industry, and real estate will become the only sideline.

Li Rucheng, chairman of YOUNGOR, said that YOUNGOR's strength is still the main garment industry. Its real estate business has been relatively stable in recent years, and it will develop in the future.

Real estate pull the battle line

YOUNGOR, founded in 1979, began crossing the border into real estate in 1992. It is one of the first enterprises to diversify.

However, although entering early, YOUNGOR does not attach much importance to the real estate sideline industry, which has led to the fact that the real estate business of the company has been in a state of low temperature for many years.

In 2015, the pre-sale amount of YOUNGOR real estate was 5 billion 985 million yuan, reaching 8 billion 489 million yuan in 2018. During the four years, the net profit of real estate business contributed to YOUNGOR remained at around 1 billion 100 million yuan, and the highest 2016 reached 1 billion 508 million yuan.

During the 2015-2018 years, 3 New Territories, 1, 3, and 5 new sites were added to YOUNGOR, and 27, 28, 29 and 32 items were sold.

By contrast, YOUNGOR has seized 6 plots in the first five months of this year, which is much more active than before.

However, an insider of YOUNGOR emphasized to the times finance that the amount of land taken in the first half of the year does not mean that YOUNGOR has to invest in real estate business. At present, there is no plan for this aspect. YOUNGOR's real estate business has maintained steady growth, so long as there are good and suitable blocks, it will be considered.

Although the strategy of traditional housing development has not changed much, YOUNGOR has been planning to pform to the new associated industries, and the front has also extended from the original residential development to the pension real estate.

In 2015, YOUNGOR began to explore the development and profit model of pension real estate.

The following year, in addition to pension real estate, YOUNGOR also proposed the development of tourism business, and invested and pformed the parent-child paradise of Dapeng mountain scenic area, built The Springs Hotel in Southern District, and bought the Ningbo bridge ecological farm located in Hangzhou bay new area.

In 2018, YOUNGOR won 75 million 96 thousand yuan to win the CX06-05-02g plot of Ji Shi Gang Town in Haishu District of Ningbo. It plans to invest 1 billion 700 million yuan to build a third grade hospital and build a healthy town with medical support.

According to the plan, 450 beds will be put into use in the first phase of 2021.

In May 23rd this year, YOUNGOR Kang brigade Holdings Limited, which is responsible for CO ordinating the operation of hotels, tourism, health and pension assets, was formally established. YOUNGOR's Kang brigade business was officially launched.

The insiders said that at this stage, the company is mainly responsible for existing asset operations including parent-child parks, hotels, farms, hospitals and so on. Kang brigade business is YOUNGOR's exploration business, and it will not expand too fast. At present, the real estate business is still biased towards residential development.

It also revealed that YOUNGOR has a development plan in the healthy town of Haishu District in Ningbo, but the land it has taken is only used to build hospitals. "Now it's time to concentrate on building hospitals, and other formats haven't come out so quickly, and the relevant land has not yet been acquired."

Divestiture business

For a long time, YOUNGOR's clothing industry has not behaved like the main industry. The more profitable real estate and investment sideline industry occupies a more important position, especially the investment business with the largest profit contribution.

"What is the main industry is not the main business, making money is my main business."

At the annual general meeting of shareholders in May 20th, Li Rucheng did not deny that in the past, under the aura of big investment and big profits, the highlights of YOUNGOR's main business were covered up.

Now, after 10 years, it has returned to its main business. Li said that YOUNGOR's strength is clothing business, and YOUNGOR should become a world-class fashion group.

The more realistic reason is that investment business is no longer as profitable as it used to be.

YOUNGOR's involvement in financial investment began in 1999. During the 1999-2005 years, it gradually invested in CITIC Securities, Guang Bo shares, yeco Technology (later renamed the hemp industry, LIAN Electronics), Ningbo bank and so on.

In 2005, the split share structure reform was completely rolled out, and the capital market entered a rapid development period. The market value of financial assets held by YOUNGOR increased rapidly, which once exceeded 20 billion yuan.

After tasting the sweetness of the capital market, YOUNGOR formally put forward the development strategy of "three carriages" in 2007. After clothing and real estate, investment is regarded as the third largest business of YOUNGOR.

In 2007, it reduced its holdings of CITIC Securities by over 2 billion 400 million yuan; in 2009, CITIC Securities, Haitong Securities and Jinma shares gained about 1 billion 860 million yuan; in 2009, China Ping An, Guang Bo shares and Jin Zhengda gained 536 million yuan.

YOUNGOR's investment standard of not losing professional investment institutions was once dubbed by investors as "mental arithmetic", "elegant securities" and "elegant investment".

Of course, YOUNGOR has not lost its hand. In the recent 20 years of speculation, YOUNGOR has suffered losses many times.

According to the annual report, YOUNGOR's investment business lost 1 billion 317 million yuan in 2008, lost 230 million yuan in 2012, and lost 489 million yuan in 2013.

The CITIC stock, which was invested in 2015, is a big failure at the moment. It has been nibbling YOUNGOR's net profit and has become the chief culprit of YOUNGOR losing 1 billion 689 million yuan in 2017.

But in any case, the profit performance of investment business has been the most brilliant for many years.

From 2013-2018 years of comparative data, we can see that in the case of no loss, the profit contribution of investment business is far greater than that of clothing and real estate business.

Source: YOUNGOR Annual Report

As a result, investment business has always been favored.

Financial investment projects grew from 11 in 2015 to 39 in 2018.

As Li Rucheng said, there are good projects that do not invest, as long as they can make money.

However, the situation changed in 2019, and those financial investment projects that were once brilliant for the rest of the day could no longer bring too much profit to YOUNGOR.

So in April 30th, YOUNGOR announced the investment strategy adjustment announcement, announced that it would return to the main garment industry and divestiture investment business.

In response to the problem of divestiture investment, Li Rucheng explained that there were two main reasons: first, the securities and Futures Commission restricted the withdrawal of equity investment, and it became more and more difficult to withdraw. This caused great pressure on YOUNGOR. Two, because of the implementation of the new accounting standards, the profit and loss of investment business was greatly influenced by the fluctuation of stock assets held by financial assets. Three, it is difficult to supervise the investment team well.

Among them, the new accounting standards implemented in January 1, 2019 is undoubtedly the most important reason.

"The accounting standards have changed so much that even the great Buffett could not understand it. He lost about fifty billion for a while and then made a profit of about sixty billion."

Li Rucheng said.

It is understood that under the new accounting standards, financial assets other than long-term equity investments are designated as "financial assets measured in fair value and whose changes are included in other comprehensive income". Their value fluctuations and disposal do not affect the current profits and losses. Only the dividend income can be included in the current investment income, thereby affecting the current profits and losses.

According to the analysis, under the old accounting standards, listed companies usually classify equity investment into "available for sale financial assets" and adjust profits.

These "sale of financial assets", the rise and fall of stock prices are included in other comprehensive income, belong to equity projects, rather than the profit table items, so even if the shares held by listed companies are substantially deficient, they will not affect profits.

Once sold, the original income can be pferred to investment income, which is reflected in the profit margin.

However, under the new accounting standards, the shares held by the listed companies, whether floating or floating, need to be included in the profit statement, which will have a great impact on the profit statement.

Simply put, the stock price fluctuation in the past does not affect YOUNGOR's profits, but now the stock price fluctuation will be directly reflected in the profit statement.

As of the end of 3 2019, only 39 of the 38 financial investment projects held by YOUNGOR were Ningbo banks belonging to long-term equity investments. That is to say, the remaining 38 projects will affect the current profits because of fluctuations in stock prices.

38 financial investment projects full of uncertainties are risky for YOUNGOR.

"Because the volatility of stock prices has a direct impact on profits, it is difficult for companies like YOUNGOR to accept such changes."

In order to "maintain stability", these financial investment projects that had made huge profits for YOUNGOR were finally sold decisively by YOUNGOR.

YOUNGOR said that in addition to fulfilling its original investment commitments, the 38 financial investment projects will take different strategies based on different investment characteristics, such as two market reduction, agreement pfer, withdrawal after expiration, exit after listing, and so on.

Profit seeking is the nature of businessmen. The reasons for strategic adjustment, returning to the main business, becoming a world-class fashion group, and creating value for shareholders are in fact ultimately a reality of "making money".