Yang Mi, A Spokesperson For Designer, Will Issue $275 Million 1% Convertible Bonds.

Boston International Holdings Limited (hereinafter referred to as "Bosideng") issued a notice at noon on December 5th that the company entered into a subscription agreement with the underwriters. Accordingly, the underwriters have agreed to subscribe individually and pay the convertible bonds with a total principal amount of $275 million.


It is understood that the issue price is 100% of the principal amount of convertible bonds, and the annual interest rate is 1%. The maturity date is December 17, 2024. The initial conversion price of the issued shares will be HK $4.91 per share, which is 27.5% higher than that of the December 4th closing price of HK $3.85 per share.


Assuming that the convertible bond can be converted into 438 million shares according to the initial conversion price of HK $4.91 per share, the convertible bond can be converted into 438 million shares, equivalent to the announcement date that the issued share capital of the company is about 4.05% and that of the convertible bond issued by the convertible bond is about 3.89% of the issued share capital.


The notice said that issuing convertible bonds could provide additional funds for the company to finance the existing short-term debt, and then optimize the company's financing structure and provide funds for the company's general business and business purposes.


Marco Li, an analyst at Soochow securities, believes that the main purpose of Boston's convertible bonds is to repay the short-term loans and supplement the company's current operating capital. In 2018, Bosideng's interest bearing liabilities were 1 billion 630 million (all foreign currency loans). The total cost is expected to be about 4%+. The convertible bond interest rate of the company is only 1% of the superimposed option fee, which will increase the annual performance of the company as a whole.


In Mali's view, Bosideng's convertible bond issuance is expected to optimize the debt structure and release domestic capital liquidity. At present, Bosideng's existing overseas liabilities are mostly one-year loans, and the debt structure has been optimized after issuing five year convertible bonds. At the same time, most of the overseas loans were carried out in the form of internal loan, and domestic liquidity was limited. The issuance of convertible bonds is expected to enhance the efficiency of domestic capital utilization.


Reporters learned from Bosideng's earnings report that in the first half of 2019, Bosideng achieved operating income of 4 billion 436 million yuan, an increase of 28.81% over the same period last year, and realized operating profit of 478 million yuan, an increase of 34.6% over the same period last year, and realized net profit of 343 million yuan, an increase of 36.43% over the same period last year, and its performance maintained rapid growth.


From the business sector:


1. The main business of down garment: during the reporting period, the business income of down garment business was 2 billion 533 million yuan, an increase of 42.87% over the same period, and maintained a rapid growth, accounting for 57.1% of total business revenue. The main brand Bosideng achieved 2 billion 277 million business income, an increase of 46.2% over the same period last year.


2, OEM processing business, operating income during the reporting period was 1 billion 349 million yuan, an increase of 21.85% over the previous year, accounting for 30.4% of total revenue, and its performance continued to maintain steady growth. The company's OEM business continues to focus on serving core customers, optimizing product performance, improving processes and improving product quality around customer needs through technological advantages, continuously enhancing the proportion of original design and manufacturing management business, and enhancing customer trust and stickiness. During the reporting period, the revenue from the top 5 customers in Bosideng OEM processing business accounted for 87.8% of the OEM processing business.


3, women's clothing business: during the reporting period, Bosideng's women's clothing business realized revenue of 506 million yuan, down 6.10% from the same period last year, accounting for 11.4% of the total revenue, and the scale declined.


4, diversified services: operating income of 49 million yuan during the reporting period, an increase of 86.95% over the previous year, accounting for 1.1% of total revenue. Although Bosideng's diversified business has been shrinking dramatically, some of its brand down clothing business has been transferred to diversified business segments, leading to a fairly flat share.


5, online channels: Bosideng reached deep strategic cooperation with Tmall and vip.com online platforms in the first half of the year to lock in high-quality resources ahead of schedule. At the same time, it increased the promotion of brand PR events and e-commerce integration, and promoted the online shopping experience of consumers by enhancing the professional quality of visual image quality and page details.


In the first half of this year, Bosideng ranked among the top IN brands in Tmall, and Tmall flagship store ratings rose from 4.83 to 4.91, and customer satisfaction increased from 93% to 96%. During the reporting period, the Bosideng channel achieved operating income of 305 million yuan, an increase of 70.9% over the same period, of which the down jacket business achieved a revenue of 263 million yuan, an increase of 91.1% over the same period, and achieved rapid growth. In 2019, "double 11", Bosideng total channel sales exceeded 1 billion yuan, an increase of 37% over the same period, of which Bosideng Tmall flagship store sales exceeded 650 million yuan, an increase of 58% over the same period last year.


From the point of view of the channel, Bosideng, while continuing to optimize the channel structure and close down inefficient shops, also pays great attention to the channel expansion in key areas. In the first half of this year, Bosideng laid a significant increase in key stores such as shopping centers and high potential mainstream channels, and steadily promoted the construction of regional core city markets. From the number of stores, as of September 30, 2019, the number of terminal stores in the company's down wear business was 5161, representing a net increase of 533 compared with March 31, 2019. There were 1922 self operated stores, a net increase of 294, a total of 3872 wholesale stores, and a net increase of 429.


From the perspective of channel structure, Bosideng's 25.5% stores are in the fashion of second tier cities, and 74.5% of the stores are in the three line and below market.


From the point of view of revenue from various channels, Bosideng self operated channel achieved 454 million yuan (+38.6%) of revenue, accounting for 17.9% (-0.6pct) of the income of down garments, and achieved rapid growth, accounting for a slight decrease. Wholesale channels achieved a revenue of 2 billion 27 million yuan (+44.4%), accounting for 80% (+0.8pct), and achieved rapid growth, accounting for an increase.


The industry believes that Bosideng recently held a joint press conference with the French hall designer gurteye, invited Yang Mi, Li Yuchun and other stars to participate, the brand fashion continues to improve, get customer recognition, bring company income and gross margin increase. The company focuses on down garment business, refines its internal strength, and starts from a single brand operation. Through successful management of effective output of experience, it is expected to realize the development of many brands such as snow flying, ice cream and so on. Multi brand growth will continue to provide a driving force for Bosideng's performance growth.


Hu Yongkuang, an analyst with Zhao Yin, believes that the brand upgrade of Bosideng is successful because the growth of its performance during the reporting period is driven by the average selling price (better than the expected growth of 15-20% over the previous year) rather than by sales promotion. It is now expected that the sales mix of high-end products will reach 40% in fiscal year 2020, and the company's future target is that the sales of high-end products account for more than 50%, so this trend is expected to continue.


Yang Mi, an analyst at Soochow securities, thinks that the marketing rhythm is very orderly after Bosteng entered the sales season. In September, Milan fashion week designers launched a series of conferences to invite the famous model KendalJenner to go to the show and NicoleKidman to watch the show. At the same time, they hired "Queen of goods" to become the spokesperson of the designer series, and the summit of the high-end series in October was very strong. In November, the designer of the Hermes designer Gao Teye launched the joint down jacket in Shanghai, and continued to cooperate with the famous European and American actors including TomHiddleston and ScarlettJohansson to display the products, and the marketing resources were higher than that of the same period last year. This year's "double eleven" sales structure also reflects the high-end sales and the younger customers and products brought about by the upgrading of products and brands. It is expected that the debt structure of the company will be further improved after the issuance of convertible bonds, and the increase in cash reserves will be beneficial to the future business development.