The Decline Of Aokang International'S Performance Is Related To The Shrinkage Of The Entire Leather Shoe Market

On December 24, 2024, Aokang International (securities code: 603001), a giant of the domestic shoe industry, issued two announcements in succession. Announcement 1 (Announcement No.: Temporary 2024-056): It is the change of the company's senior personnel: for work reasons, Wang Zhentao applied to resign as chairman of the 8th Board of Directors, member of the Nomination Committee of the Board of Directors and member of the Strategy Committee of the Board of Directors, and Wang Jinquan, director and president, applied to resign as a director of the 8th Board of Directors, member of the Remuneration and Assessment Committee of the Board of Directors Member of the Strategy Committee and President of the Board of Directors. The resignation of Mr. Wang Zhentao and Mr. Wang Jinquan will not cause the number of members of the board of directors of the company to be lower than the minimum quorum, and will not affect the normal operation of the board of directors of the company. Their resignation report will take effect from the date of delivery to the board of directors of the company.

Announcement 2 of Aokang International (Announcement No.: 2024-057): Aokang International is planning to purchase the equity of Lianhe Storage Technology (Jiangsu) Co., Ltd. by issuing shares or paying cash. This transaction is not expected to constitute a major asset restructuring, a related party transaction, or a change in the actual controller of the company.

In terms of business scope, according to the 2024 semi annual report of Aokang International, Aokang International is mainly engaged in the research, development, production, retail and distribution of leather shoes and leather goods. The product categories mainly include business dress shoes, business casual shoes and other footwear products as well as leather goods supporting products, which are mainly used to meet the growing functional and fashion needs of consumers for shoes and leather goods.

It operates a multi brand operation mode with "Aokang" as the main brand and "Kanglong", "SKECH" and "Puma" as the auxiliary brands. Its products are mainly sold in shopping centers, shopping malls and specialty stores in the first, second and third tier cities nationwide. Among them, Aokang brand is committed to providing high-end business fashion products for target customers aged 25-35, with the main price between 399-699 yuan; Kanglong brand highlights more fashion and leisure, with young consumer groups as the main force, and the main price band is between 399-599 yuan; SKECH brand products cover children and adults over 3 years old, including sports shoes, clothing, supporting products, etc., with the main price range of 399-899 yuan; Puma brand products are mainly leisure and sports series, involving running, football and other fields, and the main price range is 499-899 yuan. The positioning of each brand is clear and accurate, and the products of each brand can complement each other to meet the consumption needs of different consumers.

In terms of recent financial situation, according to the third quarter report of Aokang International in 2024, the revenue of Aokang International in the first three quarters of this year was about 1.888 billion yuan, a year-on-year decrease of 18.8%; The net profit loss was about 136 million yuan, with a year-on-year increase of 50.56%. Among them, the revenue in the third quarter was 513 million yuan, down 24.58% year on year; Net profit loss was 116 million yuan.

Stocks have long been warned of risks

According to the progress announcement of Aokang International on matters related to the implementation of other risk warnings on stocks as early as May 2024, the announcement content shows that:

Zhejiang Aokang Shoes Co., Ltd. (hereinafter referred to as "the Company") was issued with a negative opinion on the 2022 Annual Internal Control Audit Report. According to the provisions of Item (3) of Article 9.8.1 of the Shanghai Stock Exchange Listing Rules, the Company's shares were subject to other risk warnings from April 27, 2023.

On March 15, 2024, the Company and its actual controller, Mr. Wang Zhentao, went to the China Securities Regulatory Commission (hereinafter referred to as the "CSRC") to issue the Notice of Filing (ZJLZ No. 01120240008, ZJLZ No. 01120240009). According to the Securities Law of the People's Republic of China The CSRC has decided to file a case against the Company and Mr. Wang Zhentao in accordance with the Administrative Punishment Law of the People's Republic of China and other relevant laws and regulations.

On the same day, the Company received the Decision on Administrative Supervision Measures ([2024] No. 33) issued by Zhejiang Securities Regulatory Bureau. Zhejiang Securities Regulatory Bureau issued a warning letter on matters such as the Company's failure to disclose the occupation of non operating funds of related parties in the 2021 annual report, 2022 annual report and 2023 semi annual report as required (the relevant funds occupied have been returned), the Company's fund payment, and the defects in internal control related to dealer management, For details, please refer to the Announcement on the Receipt of Warning Letter from Zhejiang Regulatory Bureau by the Company and Relevant Personnel (Announcement No.: Lin 2024-006) disclosed by the Company on March 16, 2024.

What is the purpose of acquiring companies in the semiconductor field?

According to the latest announcement of Aokang International, Aokang International is planning to purchase the equity of Lianhe Storage Technology (Jiangsu) Co., Ltd. by issuing shares and/or paying cash. The trading of the company's shares has been suspended since the opening of the market on December 24, and it is expected that the continuous trading suspension will not exceed 10 trading days.

According to the announcement, Lianhe Storage was founded in November 2021 with a registered capital of 18.18 million yuan, and its main business is integrated circuit chip design and services, and integrated circuit design; IC sales; Software development; After technical services and technology import and export.

According to the official website of Lianhe Storage, Lianhe Storage Technology (Jiangsu) Co., Ltd. is a supplier of high-performance and reliable storage chips and solutions. Founded in 2021, the company is headquartered in Wuxi, Jiangsu Province, and has R&D centers in Seoul, South Korea, Shanghai, China, and Shenzhen, China. Lianhe Storage's main products include embedded memory chips PPI Nand, SPI Nand, DRAM, LPDDR, MCP, etc. The products are widely used in Netcom communication, smart home, set-top box, POS machine, sweeping robot, security monitoring, wearable devices, industrial control, medical equipment, Internet of Things and other fields. At the same time, based on the manufacturing capacity of domestic leading manufacturing partners, combined with its own R&D technology, it has successfully developed a nationwide production and chemical self-developed memory chip.

Aokang International also said in the announcement that the Company and its counterparties Gao Wei, Wuxi Xincun Enterprise Management Partnership (Limited Partnership) and Wuxi Liancun Enterprise Management Partnership (Limited Partnership) have signed the Acquisition Framework Agreement, which stipulates that the Company intends to purchase the control of the transaction object by issuing shares and/or paying cash, The pricing of this transaction will be based on the evaluation value confirmed in the asset evaluation report issued by an asset evaluation institution qualified to engage in securities and futures related business, and will be determined by the parties to the transaction through consultation. The above agreement is the preliminary intention reached by the trading parties on this transaction. The specific scheme of this transaction will be determined by the trading parties through separate negotiation and signing of a formal agreement.

At present, this transaction is still in the planning stage, the parties to the transaction have not signed the formal transaction documents, and the specific transaction scheme is still under discussion and argumentation, so there is still uncertainty. This transaction still needs to perform necessary decision-making procedures and be formally implemented after being approved by the regulatory authority. There is still great uncertainty about whether it can be implemented. The relevant information is subject to the announcement issued by the information disclosure media designated by the company. Please pay attention to the investment risks.

Objectively, the decline of Aokang International's performance is related to the shrinkage of the entire leather shoe market. According to the data of China Economic Industry Research Institute, the annual output of leather shoes in China has dropped from 4.618 billion pairs in 2016 to 3.524 billion pairs in 2021, and is expected to further shrink to 1.7 billion pairs by 2026.

According to the diversified investment and operation strategies of domestic and international listed enterprises, Aokang International is constantly seeking growth by investing in other fields, which may explain the purpose of this planned investment in the semiconductor field.