500 Million Bird Bonds Default 40 Billion "A Shares Sports First Share" Folding Wings?

"A shares sports brand first share" 603555.SH, has broken wings.

On the evening of November 11th, the "bird of 16 PPN001" failed to pay the principal and interest in full on time. It has constituted a substantial breach of contract, according to the announcement of the noble bird.

The reason for this is that the company's financing channels are severely limited, debt paying ability continues to deteriorate, liquidity is tight, and it is difficult to dispose of related assets in the short term to raise funds for the current debt payment.

It is worth mentioning that this is the first time that there has been a default in the history of expensive birds.

According to Wind data, in addition to the "16 noble bird PPN001", there are "14 birds of worth" in the "noble bird" and the current balance is 647 million yuan. The maturity date is December 3, 2019.

On the evening of November 12th, the joint credit rating Company Limited ("joint rating") lowered the credit rating of the 14 BBB to CC. A week ago, its credit rating just dropped from A to BBB.

At present, the "noble bird" not only has to face 3 billion 300 million of the total liabilities and liquidity crisis, but also needs to undertake the risk of external guarantee, and it also weighs the advantages and disadvantages of diversification.

Repeatedly downgraded

Because of the loss of performance and liquidity, this year, the birds have been downgraded many times.

In June 21st this year, the joint rating announced that the main long-term credit rating of the bird was lowered from AA to AA- due to the large net loss in 2018 and the high concentration of repayment pressure. By September 16th, the main long-term credit rating of noble birds was lowered to A again.

In November 5th, the credit rating of the company was downgraded to BBB and the rating outlook was negative.

After a huge loss of 686 million yuan in 2018, the achievements of 2019 were not optimistic.

In the first three quarters of 2019, the net profit of noble bird was -1.66 billion yuan, a sharp drop of 1134.18% compared to the same period last year. It explains that the business income of the main brand "noble bird" has declined, and sales expenses and provision for bad debts have increased significantly.

In addition, there are billions of debts of noble birds.

From the debt structure perspective, as at the end of September 2019, the total liabilities of the precious birds were 3 billion 340 million yuan, the asset liability ratio was 68.42%, and the interest bearing debt amount was 2 billion 624 million yuan, of which the short-term debt amount was 2 billion 598 million yuan.

In sharp contrast, as of the end of September this year, the amount of money on the books of the expensive birds is only 15 million yuan.

On the other hand, the joint rating pointed out that the "tight liquidity of funds" has not been alleviated and the short-term debt repayment pressure is very high.

In addition, the three quarterly report in 2019 showed that there were risks of external guarantees, and 100 million of external guarantees had overdue.

As early as September 20, 2018, the most valuable guarantee contract was signed between the noble bird and the branch of the Bank of Bao. It provided guarantees for the 130 million yuan credit of the Limited by Share Ltd, a former holding subsidiary and a related party, Hubei Jay's sports industry development.

However, due to the failure of Jay's Bank to repay nearly 100 million yuan of loans due to the contractor bank on time, the collector received the "collection notice" of the package bank, which has a large compensatory risk.

In addition, in October 10th of this year, the three letters from the Shanghai Stock Exchange also revealed the company's internal control loopholes.

According to the regulatory letter of the Shanghai Stock Exchange, it was found that, in 2015, 2016 and 2017, the "noble birds" provided financial assistance to dealers 1 billion 942 million yuan, 1 billion 745 million yuan, 1 billion 419 million yuan, totaling about 5 billion 100 million yuan, accounting for 86.85%, 73.2% and 50.9% of the latest net audited assets of the company, respectively. The balance of financial assistance at the end of the 3 year was 67 million 13 thousand yuan, 102 million 300 thousand yuan and 90 million 270 thousand yuan respectively.

The Shanghai Stock Exchange pointed out that the birds did not submit the above financial assistance to shareholders' meetings for deliberation, nor did they disclose information in time.

Diversification of "A shares sports brand first share"

Like native sports brands like Anta, XTEP, and 31st degree, the great birds grow up in "China Shoes Capital" in Jinjiang, Fujian.

The company, founded in 1987, started with international sports brand foundry, and mainly engaged in R & D, production and sales of sports shoes, apparel and accessory products.

In 2002, the precious birds began to develop their own brands, use the "noble bird" brand to produce footwear products, and heavily invited large stars like Andy Lau and Cecilia Cheung as spokesmen, and gradually became famous in the three or four line market.

In the first three years of the market, from 2011 to 2013, the annual revenue of the precious birds has stabilized at around 2 billion 500 million, close to the half of the same campaign brand Lining, XTEP, and 31st.

In January 2014, the noble bird finally landed in the capital market and became the "A share sports brand first stock". Its market value once exceeded 40 billion, and Lining overshadowed the best period.

However, in the past few years, the scene is quite different.

In 2018, the Guowu bird took the first loss year. It was a huge loss of 686 million yuan that year.

A more intuitive change is that as of the end of September 2019, there were only 2504 stores in the store. At the end of 2013, there were 5560 stores in the world, which means that the number of stores in the past 6 years has been reduced by 3056.

What led to the "folding wing" of the noble bird?

From the perspective of carding process, in the early years of 2014, the popular birds began to transform from "traditional sports shoes and clothing industry" to "sports industrialization group based on sports apparel manufacturing and coordinated development of various sports industry forms". A series of capital operations were launched around this theme, and involved in sports industry, games, insurance and other diversified industries.

In 2015, the precious bird bought 240 million shares for tiger sports and became the second largest shareholder.

In 2016, the AND1 announced that it had won the exclusive trademark operation rights of the US basketball equipment brand "AND1" as of June 30, 2047 in Greater China (mainland China, Hongkong, Taiwan and Macao).

In June 2016, the expensive bird purchased 50.01% of the sports goods retailer's 383 million yuan in cash, and in August of the same year purchased a 51% stake in the Xiamen shoe brand for 382 million 500 thousand yuan.

In mid December 2016, the company even announced that it was planning to set up an Ankang life insurance Limited by Share Ltd with 7 companies such as Xinjiang Guanghui industrial investment (Group) Co., Ltd. and red bean Group Co., Ltd., to set foot in the insurance field.

Since then, in 2017, the precious bird invested 367 million 500 thousand yuan to acquire the remaining 49% stake in the shoe store, and by Jay's Bank, it subscribed 45.45% stake in Hubei Sheng Dao sports for 150 million yuan. In addition, the market authorization of PRINCE in China and Korea was gained by 20 million euros.

It should be noted that in March 2017, Welsh announced that it plans to acquire a 100% stake in Wei Kang fitness of the "fitness" parent company by issuing shares and paying cash, and the transaction price was initially determined to be 2 billion 700 million yuan.

However, in September 2017, the market concerned transaction was terminated by the noble bird. The reason is that in the prevailing market environment, the two parties could not reach agreement on key terms such as transaction consideration and payment method.

In 2018, the precious birds sold many of the assets they had acquired before, including Jay's trip and tiger pun, which had been heavily purchased.

"Diversified development requires higher integration and operation capabilities of the company, but it does not mean abandoning the main business, but rather as a supplement to the main industry. At the moment, the exploration of noble birds is not successful." In November 12th, a sports industry practitioner evaluated this.