Billions Of Brand Assets Go Back To A. What Layout Is Shandong Doing?

Ruyi group (002193.SZ) announced that it would issue shares to buy the high-end clothing brand such as Gieves&Hawkes, Kent&Curwen, Cerruti 1881, D, urban, Aquascutum and so on, which was controlled by its largest shareholder, Ruyi fashion Klc Holdings Ltd, Beijing (hereinafter referred to as "Beijing Ruyi fashion"). After consulting business information, Ruyi fashion in Beijing is indirectly holding the 51.3% stake in 0891.HK by Jining Ruyi brand Klc Holdings Ltd (hereinafter referred to as "Jining Ruyi brand investment"), so as to control the above four men's wear brands. At the same time, the Aquascutum brand was controlled by 100% stake in Aquascutum Holdings Ltd, a direct shareholding company.

The acquisition of Li bang and Ya Ge Shi Dan is an important strategic layout of Ruyi group in the field of fashion brand in recent years. Packaging into A shares means that Ruyi Group intends to integrate its brand resources in the A share capital market. With its current leading position in the global fashion industry and its high-quality brand assets, the Ruyi group will become the first share of A shares.

Ruyi Holdings has been making frequent moves in the fashion industry in recent years. It has acquired Japanese fashion brand group Renown, France light luxury brand group SMCP (Sandro, Maje, Claudie Pierlot), Hongkong senior men's wear brand group Li Bang holdings and royal royal brand Sandro, and has controlled over 30 famous brands and over 6000 brand stores all over the world, becoming the only fashion luxury group in the world with the top 20 in global income. Ruyi acquired brand equity all over the world, of which SMCP was listed on the Euronext in 2017, and Rena and Li Bang are listed in Japan and Hongkong respectively.

Li bang was formerly a WAN Bang Group founded by Li family. Feng family's investment in Asia and Asia was bought and renamed as "Li Bang" in April 2006. At the end of 2017, Ruyi group subscribed 51.38% of its total share capital to HK $2 billion 215 million, becoming a shareholder of Li bang. At present, Li Bang operates 4 international high-end men's wear brands, namely Cerruti 1881 (Cerruti 1881), Gieves&Hawkes (Jun Huang Shi), D, urban (Dou Ben), and Kent&Curwen (Ken Diwen). The main reason for the change of Li Bang holdings is the failure of the Feng family to save its brand. Since its loss in 2015, the loss in 2016 and 2017 has reached HK $442 million and HK $608 million respectively.

As a matter of fact, the gross profit margin of Li Bang's brand is as high as 68%, leading to the continuous deterioration of its performance. The main reason is the high management cost.

Ruyi took over Li Bang holdings and began to seek its brand transformation such as Kent&Curwen, Cerruti 1881 and Gieves&Hawkes. In order to attract the new generation of consumers and cater for the trend of leisure style, Ruyi vigorously introduces the young product line, and launches the concept of the new store on the homeward trend, and gradually develops to the younger generation. In particular, Ruyi further strengthened its strategic cooperation with Asia's largest luxury electric business Temple library and Jingdong platform, opened up a comprehensive coverage of the electricity supplier channel layout, and the sales volume of its menswear brand was improved significantly after entering the temple library and Jingdong.

In mid 2018, the report showed that the retail sales of Li Bang holdings and the same store sales recorded strong growth of 8.1% and 10.1% respectively, and the reform achieved remarkable results. Ruyi and Li Bang signed an inventory sales agreement, using its strong distribution network and channel advantages to help Li Bang menswear brand solve inventory. Not only that, Ruyi holdings also made full use of the advantages of French brands such as Sandro and Maje in the European market to import Li Bang men's clothing, expand the retail and wholesale business synchronously, and enhance the international influence of the brand. Thanks to this, the authorized revenue of Li Bang men's wear increased by 108.9% in 2018.

Through a series of internal and external reforms, the profits of the group in 2018 reached HK $1 billion 723 million, an increase of 1.28% compared to the same period last year. The core business realized a deficit of HK $248 million, a decrease of 43.74% compared to the same period last year. The profit attributable to shareholders should be realized at HK $265 million, down 56.47% compared to the same period last year. Gross profit realized HK $1 billion 195 million, an increase of 3.02% over the same period last year. Since the fourth quarter of 2018, Li Bang has achieved quarterly losses to win, and Ruyi has become a real "savior".

Ruyi Holdings has more than one successful integration of its acquisition brand. Aquascutum, one of the underlying assets of this transaction, originated in London and was founded in 1851. It is one of the most historic and cultural luxury brands in Britain. The word "Aquascutum" comes from "Aqua" and "scutum" in Latin. The meaning of "water" and "defense" is the meaning of waterproofing. It is concise and clear, highlighting the biggest selling point of the brand: waterproof and windproof. During World War I and World War II, British soldiers on the front line were protected by the functional Englishi windbreaker. Their outstanding practicality has been loved by the British, including the British royals, celebrities and celebrities.

Known as Burberry and Barbour, Aquascutum, also known as the "British windbreaker", has also received the Royal form from the British royal family. In 1897, it was awarded the brand. After the Royal certification, Aquascutum officially became the Royal brand. In terms of fabric, Aquascutum's water splashing fabric has made remarkable achievements. It was praised by the media as "the most influential technological innovation in the water blown windbreaker". In 1966, it won the award of the Queen's honor, and at the same time, the world saw the brand's innovation ability.

Aquascutum's windbreaker has been an integral part of the British fashion circle for many years, and also occupies an important seat in the international fashion circle. In 2017, Ruyi group purchased the YGM business and assets from the US $120 million, becoming the global controller of the brand. After the acquisition, Ruyi took advantage of its own industry chain resources to help him develop the brand customized market and help him enter the Jingdong mall to open up the era of Internet sales. As one of the target assets, A shares listed companies must have completed the "rescue" work.

Judging from the fashion layout of Ruyi holdings, SMCP is also an outstanding representative of the city. As a representative of France's luxury brand, SMCP has been in the field of fashion in recent years. Since its acquisition in 2016, Ruyi Holdings has implemented a series of integration measures, including improving management incentives, helping them develop the Asia Pacific market and expanding digital channel business. The results of these measures are particularly prominent in the performance: the annual sales volume rose by two digits per year, and the global income rose by 11.5% in the first quarter of 2018, the first time to break through 1 billion euros, which was twice that before the acquisition. The Asia Pacific market sales increased 32.2% to 202 million euros compared with the previous year. This performance mainly benefiting the mainland's fourth quarter sales growth of over 20% over the previous year, and the adjusted EBITDA growth of 11.6% to 171 million 500 thousand euros, with a net profit of 50 million 200 thousand euros and a close to RMB 400 million yuan.

In the near future, SMCP has bought the French luxury brand De Fursac, which is the layout of the SMCP men's wear field. It will have a good synergy with the existing brand of SMCP. De Fursac sales in 2018 reached 41 million 400 thousand euros, an increase of 5.4% over the same period, and the EBITDA profit margin was higher than SMCP. After the acquisition, it will enhance SMCP earnings per share.

Ruyi group has completed the actual controller changes since 2014. It has been completed for 60 months at the end of June 2019. This critical time point has issued a major asset reorganization announcement, which makes people wonder whether Ruyi Group intends to integrate its fashion brand resources in A shares. If this is the case, will there be any big moves in the SMCP follow up? After all, SMCP as its high-quality light luxury brand assets, its brand awareness and performance growth are hard to ignore. If we want to play this big game, we should not miss the most important pieces. If, as I have guessed, compared with the brand resources of similar companies owned by the A share clothing and apparel section, the brand of Ruyi group, whether it is high-end, high premium or profitability, is a well deserved leader. A shares will own their own "LVMH".