The Big Dollar Debt Due To Shandong Next Month Will Be The Real Test.

Today, the "textile industry leader" Shandong Ruyi science and Technology Group Co., Ltd. (hereinafter referred to as "Ruyi Technology Group") has been searched again.
In November 13th, Shandong Ruyi Technology Group issued a notice on the "17 Ruyi 01" back sale real-time results announcement. According to the announcement, today's "17 Ruyi 01" will carry out 275 million yuan's cash sales payment.
At this point, Shandong's willingness to calculate is another disaster. The "15 Ruyi" debt, which was sold back in October, has been paid, but the dollar debt that will expire next month will be the biggest risk of 2 billion 500 million yuan.
Twists and turns in recent months
In October 23rd, the "15 Ruyi debt" successfully paid 300 million yuan for the sale, and the market could not help sighing. Thanks to the rush to return to sales, the "Shandong Ruyi" company received state owned capital "blood transfusion" and "full guarantee".
In October 18th, Shandong Ruyi science and Technology Group announced that the controlling shareholder, Ruyi fashion, transferred 26% stake to Jining, a state-owned capital city, with a price of 3 billion 500 million yuan, which became the second largest shareholder of Ruyi technology. At the same time, Jining city investment will provide full irrevocable guarantee for the remaining bonds of the 15 return of the "Ruyi debt" in October 23rd. Ruyi fashion still holds 53.49% stake in Ruyi technology.
The introduction of state-owned shareholders is not the first time for Ruyi group. The 26% stake was actually held by Yinchuan gold holding company with state-owned assets in Yinchuan. It is worth noting that on the eve of the transfer in October 18, 2019, Yinchuan golden control has just transferred the 26% stake to Ruyi fashion.
Ruyi group has no default bonds at present, but in August this year, "18 Ruyi 01" appeared trading price changes and "19 Ruyi technology MTN001" abnormal turnover. For this reason, Shandong Ruyi group issued a clarification announcement that it was a few investors who passively leveraged and sold many bonds held by their investors because of their liquidity problems, which involved the issuance of bonds, resulting in price deviation. He also said that the current production and operation activities are all normal, the financial situation is steady, and have strong liquidity and debt paying ability, which can guarantee the full maturity of the maturity bonds.
In September 19th, the S & P global rating lowered the long-term credit rating of Italian technology from "B" to "B-", and reduced the debt rating of the company's secured unsecured bonds from "B-" to "CCC+".
Moodie ratings also lowered the company family rating of Shandong Ruyi Technology Group Limited from B2 to B3 in October, while downgrading the B3 rating of the senior unsecured notes issued by Sheng Mao Holdings Limited and Ruyi tech guarantee to Caa1.
The rating of both agencies is known as "junk debt" by the outside world.
Shandong's past and present
Shandong Ruyi Technology Group is known as "China's LVMH". LVMH is the world's largest luxury group, with its top brands such as Louis Weedon, Dior and Givenchy.
Its start is very grass-roots. Its predecessor was the Jining wool textile mill established in 1972. It was later renamed Shandong Ruyi woolen clothing group Limited by Share Ltd. In 2001, Qiu Yafu, the rudder of Shandong Ruyi wool textile group, invested 20 natural persons and registered Jining Ruyi venture Co., Ltd., renamed Shandong Ruyi science and Technology Group Limited one year later, and went public at the Shenzhen Stock Exchange at the end of 2007.
In addition to the Ruyi group, which is listed in China, there are two other listed subsidiaries of Ruyi Technology: Renown listed on the Tokyo stock exchange and SMCP group listed on Paris Euronext. This is the two most exemplary part of the global fashion area.
Over the past ten years, "Ruyi" has spent about 4000000000 US dollars on overseas high-profile acquisitions of fashion and luxury goods companies. It has been transformed from a local private enterprise into a star company in the global fashion industry.
　 Buy and buy buy and buy
In 2009, Ruyi's chief executive, Qiu Yafu, took control of Ruyi technology, and quickly began to expand global M & A expansion, including buying about 4000000000 yen in 2010 (about 310 million yuan) to buy the Japanese Rena; from 2011 to 2014, it bought Australia's ranoldu ranch and cotton giant cob cotton yard, and the British Taylor wool spinning company.
Qiu Yafu's overseas M & A has reached a climax in the past three years. In 2016, Ruyi technology invested 1 billion 300 million euros to become the controlling shareholder of the French light luxury group SMCP; in 2017, it bought the British windbreaker brand Aquascutum (Jagle Dan) and the 2 billion 200 million Hong Kong dollar holding Hong Kong stock listed company Li Bang holding for 117 million US dollars in 2017; in 2018, Qiu Yafu bought the Swiss luxury brand Bally with the value of 600 million euros in Ruyi fashion; in the beginning of 2019, Ruyi technology purchased the Lycra brand clothing and senior textile business for three years from 2 billion 600 million US dollars.
Buying so much, where does the money come from? Using government funds to leverage is a brilliant idea for Shandong's leading enterprises and local business cards. In the course of the acquisition, the support of the government gave Shandong great momentum. Taking the takeover of the United States as an example, Yin Kang, chief investment officer of Ruyi holding group, told Shandong's "popular daily": "the 400 million yuan government guidance fund has leveraged 17 billion yuan in cross-border acquisitions, which has played a great role in leveraging the acquisition of the laikha group."
Massive acquisition of debt crisis
It is understood that the Shandong Ruyi Technology Group is not every purchase is a win-win situation, Ruyi in the selection of brands, it seems to always look at a number of performance loss, declining trend of the object, Gan as "take plate Xia".
One
In 2010, Ruier, which had been bought as it pleased, has fallen into a downturn. Its revenue dropped 17.27% to 129 billion yen in the same period. In 2011, its revenue continued to drop 43.24% to 73 billion 300 million yen. In the past few years, its revenue has not exceeded 80 billion yen mark, and net profit has been lingering at the margins of losses and profits. Two
Before the acquisition, the business has been shrinking. According to the associated business network reported that the brand 2014/2015 fiscal year income of HK $644 million 800 thousand, 2015/2016 fiscal year revenue plunged 19.6% to HK $518 million 500 thousand. As of the first six months of September 30, 2016, brand income was only HK $191 million 600 thousand, and the decline was more than that. Three
Li Bang's men's wear began to suffer from sustained losses in 2015, with net profit loss of HK $89 million in the year, a loss of HK $442 million in 2016 and a loss of HK $608 million in 2017. In 2017, it was launched after a ruyi takeover. The business restructuring plan was launched to control costs through a large number of stores, factories and layoffs. In 2018, the net profit deficit finally narrowed to HK $248 million.
All these things bring huge debt pressure to Ruyi.
Ruyi technology group capital chain tension?
By the end of the first half of 19 years, the currency of the uwv group was 8 billion 887 million yuan, but 4 billion 690 million of them were restricted funds, and the available funds were only 4 billion 197 million yuan.
Profitability began to decline slightly in 2018, operating income of 34 billion 282 million yuan, a decrease of 4.07% over the same period last year. Operating income in the first half of 2019 was 20 billion 339 million yuan, an increase of 15.57% over the same period last year, and net profit of 549 million yuan, an increase of 20.53% compared with the same period last year. The operating cash flow was inflow of 888 million yuan.
As for bank credit, as at the end of 6 2019, the company received 18 billion 700 million yuan of bank credit and 3 billion 130 million yuan of credit was not used.
Source: DM client
From the above sources of funds, Ruyi Technology Group currently has only 8 billion 215 million yuan of disposable capital, but its short-term debt pressure, such as bank loans, is 10 billion 137 million yuan, and the overall interest bearing debt is as high as 27 billion 158 million yuan.
External guarantees, up to now, a total of 2 billion 160 million yuan, of which "Diamond Flower" guarantee 1 billion 235 million yuan, "Yu Long" guarantee balance of 580 million yuan, "100 million guarantee" balance of 200 million yuan.
Ruyi Technology Group guarantees most of the enterprises are "mutual insurance" private enterprises, and some enterprises have been listed on the list of dishonest executors many times.
According to the DM client, there are currently 5 total loans in Shandong Ruyi state, and the total amount is 5 billion 394 million yuan. The principal interest payable during the year is 417 million yuan: the source: DM client.
For offshore debt, $345 million (about 2 billion 500 million yuan) will expire in December, which is even more worrying for investors.
Shandong's private enterprises are more dependent on capital markets, coupled with the slowdown in China's economy. The S & P expects liquidity and refinancing challenges faced by private enterprises in Shandong to be eased in the short term. Although the Shandong provincial government may try to help some of the difficult enterprises, the relief will be selective and conditional. Government assistance may not fundamentally cure the ills of enterprises, and most enterprises will eventually have to earn their own living.