Bosteng'S Urgent Suspension Is Not To Be Hurt.

In June 24th, a short selling report attacked Bosideng International Holdings Limited (hereinafter referred to as "Bosideng"). Its share price suffered a sudden collapse in Hong Kong stock early trading, and then suspended trading at 11:16 on the same day. The latest report shows that Bosideng's performance is indeed on the rise, which is inseparable from its strategy of returning to its main business. But in the industry's view, Bosideng's development is also facing a bottleneck. After the stock price encountered short selling, it is still unknown whether Bosteng, who has returned to its main business, can return to its peak.

In June 23rd, the short selling agency Bonitas issued a report questioning the 807 million yuan of Boston's false profits to attract investors. From the current situation, the short report questioned Bosideng's net profit.

It is reported that the short selling agency Bonitas released a report on Sunday that Bosideng founder and group chairman Gao Dekang and his conspirators drew blood from the small shareholders' office, including 807 million yuan to make false profits to attract investors, 2 billion yuan never to disclose insider buying assets, to dispose of assets worth 65 million yuan to Gao Dekang at a low price of 5 million 400 thousand yuan, and to issue high historical dividends to insiders who own more than 65% of the group's shares, and the agency believes that the stock value of Bosideng is zero.

Bosideng was plunged sharply after the short selling Bonitas was short, and the company then announced the suspension. As of the suspension, Bosideng fell 24.78% to HK $1.73, with a turnover of HK $327 million, a turnover of 172 million shares, and the latest total market value of HK $18 billion 500 million, the biggest decline since July 2018.

Bosideng, the responsible person, told the Beijing daily news that the short selling of local enterprises in Hongkong was often encountered. The content of the short report is not true. The company's fundamentals are no problem at this time, and the announcement will be released this week, which will give a positive response to the report. As of press release, Bosideng has not yet issued a positive response announcement on this matter.

In fact, in recent years, short selling agencies have repeatedly targeted domestic brands, but only this year, the brands such as Zhou duck and Anta have not been spared.

Although the behavior of short selling agencies has caused international investors to pay attention to domestic brands, in the view of Song Qinghui, a famous economist, this short sale will have a negative impact on Bosideng's performance, especially on its revenue, and will also have a vicious impact on the future development of Bosideng, or it will go downhill from then on.

Performance rebound

In the short selling report, Bonitas questioned Bosideng for exaggerating profits. Statistics show that Bosideng is a leading enterprise in China's down garment industry. The company's business can be divided into brand down clothing, down garment processing, women's clothing and diversified businesses, including brands of Bosideng, ice cream and snow flying in the brand down garment business, which was successfully launched in Hongkong in 2007. The company's revenue reached the peak of 9 billion 330 million yuan in 2013, but after that, the income and net profit of 2014 began to decline due to extensive expansion and diversification of business.

In recent years, through the upgrading and adjustment of strategy, channel, brand and supply chain, the company's performance and share price rebounded sharply in 2018. In the middle of 2018, Bosideng showed a brilliant performance. As of September 2018, Bosideng's revenue was 3 billion 444 million yuan, up 16.4% from the same period last year, and its gross profit reached 1 billion 455 million yuan, an increase of 22.5% compared with the same period last year, with gross margin reaching 42.3%, up 2.2% over the same period last year. According to the 2018 annual report released by Boston on the HKEx, the company achieved operating income of about 8 billion 900 million yuan during the reporting period, and the corresponding net profit was about 615 million yuan in the current period.

In June this year, Guoxin Securities and Orient Securities gave Bosideng a buying rating. Among them, Guoxin Securities believes that the leading position of Bosideng industry is stable, and the dividend reform continues to be released. Under the trend of demand upgrading, supply clearing and industry concentration increasing steadily, Bosideng vigorously promotes brand remolding through the accumulation of R & D and brand resources accumulated over the years, and effectively grasps the trend of younger consumption upgrading, and is expected to continue to achieve fundamental recovery. It is estimated that the EPS of FY19-21 is 0.08/0.11/0.14 yuan, corresponding to PE is 21.9/16.4/13.3 times. Taking into account absolute valuation and relative valuation, the company will give the company a reasonable valuation range of HK $2.57-2.78 within a year, and the leading position of the group industry is stable. The brand reform dividend is expected to continue to release, giving a "buy" rating.

Focus on main business

It is worth mentioning that Bosideng is still in spanition. In 2018, Bosideng put forward the strategy of "focusing on main channel (down jacket) and shrinking diversification" to upgrade Bosideng brand. Since then, Bosideng has tried a diversified spanformation. Since 2009, Bosideng has made diversified attempts to enter into men's wear, women's wear, children's wear, business men's clothing, home and so on through acquisition and joint ventures, but the result is not ideal.

In the 2009-2013 fiscal year, Bosideng channel expansion continued to accelerate, and reached a peak of 1.3 in fiscal year 2013. Since the 2014 fiscal year, the industry has entered a cold winter. The company actively optimizes the retail network in the difficult operation and closes the inefficient shops to enhance the quality of the shops. Revenue fell from 5 billion 738 million yuan in 2010 to 4 billion 80 million yuan in 2015. In 2016, Bosideng launched a fashion style down jacket through cooperation with famous designers both at home and abroad. In 2017, Bosideng announced the contraction of men's clothing, home, children's clothing and other non feather down businesses, and refocusing resources on the down jacket industry.

But there is still a long way to go when we want to go back to the top. At present, how to balance the high-end positioning and the mass market is one of the plight of Bosideng. Zhu Gaofeng, chief financial officer of Bosideng, once said at the end of November 2018 the annual conference call on mid term results showed that the price of Boston down clothing increased by an average of 20%-30% in 2018, and Bosideng will continue to raise its price in the future. The price of the main product will be set at 1500-2000 yuan, and the proportion of high-end products will be increased.

Cheng Weixiong, general manager of textile and clothing management and Shanghai Liang Qi Brand Management Co., Ltd. believes that fish and bear's paws should not have both. The popularization is the foundation of the success of Boston, which should not be given up, so in the brand promotion and market operation, Bostan has to do well both the high and middle grade user groups to upgrade the product series, and also to meet the needs of the public consumption.

At the same time, the integration of products such as popular demand and fashion, internationalization, national tide and IP joint is also a difficult problem in Bosteng's brand upgrading at this stage. Cheng Weixiong pointed out that fashion and trend are minority needs, but brands need fashion and trend to lead development. Therefore, for Bosideng, the fashion and user needs of down coats should be strengthened.