Why Did Youngor'S "Troika" Fall Into A Dilemma And Return To The Main Business?

After the stock price fluctuated up and down for more than a year, Youngor Group Co., Ltd. (hereinafter referred to as "Youngor", 600177. SH) had little to do.

During the period, the company continuously repurchased and declared its confidence in the future prospects. It made a profit of 900 million yuan from the disposal of some shares of Bank of Ningbo. It also delivered the highest performance of the Chinese newspaper in the past four years. At the same time, it repeatedly stressed that "return to the fashion industry, and stop all irrelevant businesses that should be stopped.".

Up to now, Youngor's dynamic P / E ratio is still around 7 times. Excluding companies with negative valuation, Youngor ranks last in Shenwan garment and home textile industry.

Bottom of valuation ranking

On August 31, Youngor's long silent stock index suddenly became restless. At the beginning of the trading, Youngor rushed to the trading limit board and closed at 7.7 yuan per share, which reached a new high in nearly a year.

On that day, Youngor put two big news to the capital market.

In the first half of this year, Youngor achieved the highest performance in four years: operating revenue of 6.958 billion yuan, a year-on-year increase of 51.8%; net profit attributable to the parent of 2.876 billion yuan, a year-on-year increase of 42%; deduction of non net profit increased by 32% to 2.5 billion yuan.

"In the real estate sector, jiulijiangwan, ziyutai, Daya garden and Suzhou zhijinhuating projects are carried forward and confirmed for delivery, thus promoting the company's performance growth." According to the financial report.

During the same period, the company also announced that from August 12 to 31, it sold 48.447 million shares of Bank of Ningbo, generating investment income of 900 million yuan and contributing 468 million yuan of net profit to listed companies.

With investment contribution superimposed with interim net profit, Youngor has locked in a net profit of RMB 3.344 billion, exceeding the net profit attributable to the parent of RMB 3.1 billion in the first three quarters of 2019. No surprise, the company's net profit will continue to grow in the first three quarters of this year.

However, the capital market Carnival lasted only one day. From September 1, Youngor's share price fell again until September 10, with a cumulative decline of 8%. The share price closed at 7.09 yuan / share, underperforming the clothing and home textile sector (2.3%).

Looking back, Youngor's share price has remained at this level since the middle of last year, and the dynamic P / E ratio has been floating around 7 times.

"The root cause of Youngor's low valuation is that the diversification effect is not ideal." Yan Yuejin, research director of think tank center of E-House Research Institute, told investor.com.

Debt and litigation risk

In 2007, Youngor established the "three carriages" strategy of clothing, real estate and investment, and began to expand aggressively.

At that time, founder Li Rucheng said with great experience: "the profits made by investing in real estate and financial securities are not what Youngor clothing can earn in 30 years."

According to the statistics of investor.com, from 2007 to the first half of 2020, the company's total revenue reached 166.2 billion yuan, of which clothing business contributed 66.4 billion yuan of revenue, accounting for only 40%, and the remaining 60% was basically contributed by real estate and finance.

In the first half of this year, the revenue of its fashion clothing business decreased by 17% to 2.6 billion yuan, and the net profit attributable to its parent decreased by 39% to 390 million yuan. In sharp contrast, the company's investment business and real estate business net profit increased by 18% and 329% year on year.

Even if the profit is not poor, Youngor is still determined to focus on the main business. Recently, when the company greatly reduced its holdings in Ningbo bank, it said that it would not make equity investment.

In the past two years, Li Rucheng repeatedly stressed: "Youngor will gradually build into a world-class fashion group in 30 years. The idea of future development has been clear, that is, fashion industry. Other unrelated businesses should be stopped, and those that should be collected should be taken away. "

Due to the large amount of cash consumed by real estate and financial investment, Youngor's current ratio and quick ratio are lower than the normal value of 2 and 1 all the year round, and the debt repayment pressure has increased——

According to the interim report in 2020, the company's monetary capital decreased from 16.3 billion yuan in the same period of last year to 9.6 billion yuan, and the debt to be repaid within one year increased by 8 billion yuan to 26.74 billion yuan compared with last year. The current ratio and quick ratio were 0.76 times and 0.41 times respectively.

Too much foreign investment also brings business risks. Enterprise check data show that there are 3740 associated risks in Youngor. Among them, Youngor Hotel and Lingfeng venture capital have been cancelled; Lianchuang electronics and Guangbo group have violated the trust letter; Tianyi securities and Yiding trade are abnormal; as well as relevant administrative penalties, public summons and other information.

The fluctuation of real estate and investment business is big and the development is not as expected, which is also one of the reasons why the company resolutely returns to the main business.

According to Kerry data, in 2019, the domestic 100 billion real estate enterprises will expand to more than 30, and the leading real estate enterprises will rush to one trillion yuan. However, Youngor is still hovering around 10 billion yuan, ranking 164 in the industry with 9.4 billion yuan of sales; in the first half of 2020, it ranks 129th with 6.28 billion yuan of sales.

Investment. In the past, Youngor invested at least 20 listed companies, including Shanghai Pudong Development Bank, SAIC Group, CITIC Securities and other well-known enterprises. Most of the investments made by CITIC Bank in 2018 did not make a loss due to the impairment of the remaining shares of CITIC Bank.

"Return" to the main business is far away

This time, Youngor made vigorous efforts to start live selling while operating the micro mall. The main direction is online transformation.

In March this year, Youngor's first live broadcast of "307 favorite men's Day" drove sales to exceed 5.42 million; in April, three live broadcasts of "ten stores and celebration of one hundred cities" achieved sales of 5.42 million, 11.61 million and 8.28 million respectively.

At the same time, in the brand design, Youngor has also changed the past "thrifty". In 2019 and the first half of 2020, the company's R & D expenses will reach 44.22 million yuan and 51.74 million yuan respectively, and the R & D reported in the previous three years did not exceed 10 million yuan.

At the same time, Youngor is still unable to give up "irrelevant business". In 2019, Youngor spent 6.8 billion yuan on land acquisition, double the 3.4 billion yuan in 2018.

In April this year, Youngor, together with Baolong, won the second phase plot of Huanglong trading city, Guanghua unit, the core area of Wenzhou City, with a total price of 4.862 billion yuan. In July and September, the subsidiary won the right to use two state-owned construction land in Haishu District of Ningbo City, at a cost of 2.563 billion yuan and 1.87 billion yuan respectively. The amount has exceeded that of last year.

As a result, in the first half of this year, Youngor's cash flow from operating activities decreased by 70% to 634 million yuan.

Similar scenes are always on.

As early as around 2012, Youngor acknowledged "high dependence on the capital market", and stated that it would gradually reduce the scale of investment and further increase the investment in brand clothing. But since then, it is still addicted to "speculation".

In October 2016, Li Rucheng announced the business transformation, which will take five years to rebuild a Youngor. Close small stores, open big stores, build "Youngor's home" with a large sum of money, and create 1000 self operated stores with a turnover of more than 10 million yuan in five years.

Five years has come. By the end of the first half of 2020, the company has 2372 outlets of various types, with an average turnover of only 1.11 million yuan. The news about "Youngor's home" and "big store strategy" stopped in the search engine in 2017.

"Investor network" on the relevant issues related to Youngor, the company has been unable to give any explanation.

According to AI media reports, Youngor's share of the city has not changed much in the past five years, all 7%.

"It's called the" troika ", but when three different kinds of wheels are installed on one car, it's hard to avoid taking care of one and losing the other." Yan Yuejin analysis said, "Youngor has invested too much in financial investment and real estate sector in the early stage, so it is difficult to get off the horse; but now it is not a good time to return to the main clothing industry, because the company is still facing many difficulties such as the aging brand."

In order to recover the loss of capital, since this year, Youngor has been buying back the protection. On May 19 this year, the company announced that it had spent 2.5 billion yuan to buy back 385 million shares at a price between 6.11 and 6.79 yuan.

Such measures will eventually cure the symptoms rather than the root causes. According to wind data, in the past two years, there is only one Research Report on this company. "Youngor clothing digital marketing efficiency, orderly expansion of real estate projects; during the epidemic period, the company launched a new mode of micro mall and live marketing to accelerate the pace of e-commerce development; the real estate sector has good brand power in the regional market, with abundant follow-up reserve resources, which can support sustainable development." Recently, Guotai Junan Hao Shuai team gave a "cautious overweight" rating.