Lining 1 Billion 500 Million Won 590 Acres Of Industrial Land In Guangxi, And Built Supply Chain Base To Produce High-End Sports Equipment.

The local sports brand leader Li Ning Co Ltd (hereinafter referred to as "Lining") issued a notice in November 8th. In November 8, 2019, the company's indirect wholly-owned Affiliated Companies Lining Guangxi and Guangxi ASEAN Economic and Technological Development Zone Management Committee entered into an investment agreement. Accordingly, Li Ningguang agreed to invest in the project, and the committee agreed to assist Lining in Guangxi to implement the project through Lining's acquisition of the land's right to use the auction.

According to the disclosure, the project can only be carried out by Lining Guangxi after the land use right of the land is successfully obtained through the auction process. The project will involve the construction and supply chain base of the land to produce, package and develop high-end sports equipment, including but not limited to sports shoes, sportswear and sports equipment. The land is located in an industrial area with an area of about 590 mu, and the investment agreement shall be valid for 10 years from the date of signing.

The maximum investment of the project is about 1 billion 500 million yuan, including the cost of land acquisition and the expenses involved in the construction of the supply chain base. The amount of investment is estimated according to the scale of the project and the investment in the construction of plant and ancillary facilities, production line equipment and new technology. The amount of investment will be allocated by the internal resources of the group and the capital injection made by some of Lining's Guangxi business partners.

The announcement indicates that the project will increase the annual production capacity of the differentiated sports products and the research and development of sports product functions, and help the group continue to improve its production technology and cost management capabilities. The new production line will help to increase the capacity and output of differentiated sports products, so as to further expand the market share. This is also conducive to the growth of group business, which will ultimately help the group to take a leading position in the industry.

Wu Jincao, an analyst with state securities, said before that Lining had no own factories, and the products were produced through outsourcing. The supply chain is still a link between Lining and the same industry. At present, Lining has already leased the shoe production factory in Nanning, Guangxi province. The goal is to gradually precipitate the core competence of the industry in the Lining system, so as to enhance the capability of its own supply chain management and R & D technology application.

It is reported that in 2018, the Li Ningxin supply center developed and introduced quality suppliers and new factories, nurturing and improving production capacity, and strict cost control, and improved product delivery speed and quality management, product innovation and differentiated R & D mode innovation. The delivery punctuality and quality management during the double 11 period in 2018 were improved to some extent.

Soochow Securities Research Institute Ma Li also introduced that as the earliest local sports clothing brand, Lining was elected as the Asian Games national team award clothing in 1990, and was chosen as the Olympic Games Chinese delegation to make the award winning shoes and clothing in 1992. With the influence of the natural brand influence, it developed rapidly. In 1993, after opening up the distribution system, it quickly developed the channel to become the first local sports clothing brand. Especially after the listing in 2004, with the strong financial strength superimposed on the sports boom brought by the Beijing Olympics, the company expanded its active stores with a net annual increase of 700-1000, and the compound growth rate of 01-09 and net profit was as high as 36%/44%.

Since 2015, Lining has returned to management. The early retail and supply chain adjustment has gradually reflected the results and the profit elasticity has been gradually released from 2017. The superposition of February 2018 launched China Lining has aroused great concern.

Mary said that in 2015, Lining's logistics and supply chain departments integrated into the sales team to promote the optimization of supply and marketing process.

1), the supply chain maintains the survival of the fittest, starts the upstream resources conformity, entered the production domain in 2018, Lining in Nanning, Guangxi rents the shoe product production factory, the goal enhances the supply chain management and the research and development technology knowledge application ability.

2), Lining further improved the ability of fast response: as of 2018, the proportion of fast and reverse products reached 20%+, and the goal was to further enhance efficiency on the basis of the average fast reverse period of existing shoes and clothing for 2 months.

3), logistics upgrading, Lining introduced Jingdong and other strategic suppliers and investment logistics and other cost suppliers to optimize the supplier structure; since 2016, all the regional logistics centers and national logistics centers have completed the business process transformation and information upgrading, and they can also have the wholesale logistics, retail logistics, and direct online customer service business logistics capabilities. As of 2018, the total warehouse has been dominated by more than 800 stores in the country. The evergreen fund has been rolling up replenishment to more than 1500 stores throughout the country, reducing the time of new products in the warehouse and improving the efficiency of warehouse utilization.

In the Lining strategy, the electricity supplier is not an inventory digestion platform, but an important product sales platform. It is also an omni-directional experience platform for users to interact with brand products, market activities, stars and events. Since 2018, Lining electric business has an independent supply center of footwear products, and has begun to develop the "retrospective" product development, which is specially provided by the electronic commerce. The positioning of the high price sports shoes and shoes with both the street trend and the Chinese style is widely used for reference, including the Chinese elements such as unicorn, amber, colored glaze and Terracotta Army. In 2019, the company plans to supply 40%-50% to the electricity supplier.

In 2018, Lining's electricity supplier income reached 2 billion 220 million yuan, accounting for 22% of the total revenue of Lining's large cargo report, accounting for 21.1% of the company's total revenue. It has become Lining's most dynamic sales channel. In the future, it will continue to plough deep in the data management capabilities, store experience value and cultural sedimentation, hoping to interact with the offline, and further form a shop matrix + shop matrix from the media.

Business data from Li Ning Co show that as of the third quarter of September 30, 2019, Lining's same store sales recorded a high 10%-20% growth year by year, while retail sales showed a low 30%-40% growth year by year. The two quarter of the year 2020 (excluding Lining YOUNG and China Lining) recorded a low 10%-20% growth year by year.

As of the three quarter of 2019, Lining (excluding Lining YOUNG) had a total number of sales outlets in China totaling 6564, representing a net increase of 142 over the two quarter, a net increase of 220 over the beginning of the year. In the 220 sales outlets with a net increase, retail outlets decreased by 163, and wholesale outlets increased by 383. As of the three quarter, the number of sales outlets of Lining YOUNG in China totaled 926, representing a net increase of 54 over the two quarter, a net increase of 133 over the beginning of the year.

Wu Jincao predicted that Lining's net interest rate will continue to rise in the next three years, driven by the best-selling margin of products and the optimization of sales channels and the reduction of sales cost.