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The Power Of Capital: Why Did These Two Jinjiang Shoe Enterprises Perform "Negative Life"?

2020/11/17 12:04:00 0

Guirenniao

Capital is a double-edged sword. If it is used well, it will ride the wind and waves, but if it is not used well, it will eat itself back. Today, such scenes are being staged on Anta and noble birds.

Anta and guirenniao have successively landed in the capital market, and both of them have vigorously carried out capital operation and sought new development space through frequent acquisitions.

But now, the noble bird is in deep debt crisis, selling assets to survive; Anta is still purchasing and seeking further expansion.

With the same "buy and buy", the noble bird is coming to an end with a market value of less than 1.3 billion yuan. Anta has become the number one sports brand in China, with a share price of more than HK $100 per share and a market value of HK $274.3 billion. Just in the past "double 11", Anta Group's e-commerce turnover was 2.84 billion yuan, an increase of 53% over last year. However, the noble bird did not release any sales data. The latest news in the media is that "Lin Tianfu, founder of the noble bird, has received a consumption restriction order".

Why did these two Jinjiang shoe enterprises perform "negative life"?

1. Falling from height

The story of the capital of the noble bird is hard to tell. For two consecutive years, the risk of delisting has been on the edge.

The epidemic situation is even worse. Judging from the third quarter financial report of guirenniao, its operation shows no signs of improvement, and its performance further deteriorates. From January to September 2020, the company achieved revenue of 847 million yuan, a year-on-year decrease of 27.57%; the net profit attributable to shareholders of listed companies was 259 million yuan, compared with 166 million yuan in the same period of last year.

At the same time, the assets of the noble bird are also shrinking. The net assets belonging to the shareholders of listed companies decreased by 54.99% year on year, leaving only 220 million yuan. The total assets were also in a declining state, at 3.641 billion yuan. However, the total liabilities of guirenniao are as high as 3.404 billion yuan, and the asset liability ratio is as high as 93.49%.

Due to the failure of the noble bird to cash its bonds and repay its debts on schedule, the court issued a "consumption restriction order" requiring the noble bird and its legal representative, Lin Tianfu, not to engage in consumption behaviors that are not necessary for life and work.

"Few people have heard of the store, because they have not mentioned it." Yang Canyue (not his real name), once a big fan of the noble bird, is not surprised by the decline of the bird.

"It was around 2008 that the noble bird suddenly became the most popular sports brand among the young people in our county. Everyone was proud to own the shoes and clothes of the noble bird," Yang recalled. "At that time, there was only a wall between the noble bird and Anta's shops, which were not far away from the stores of Li Ning, Jordan, Tebu and 361 degrees, but it was still the noble bird who was in business."

"At that time, the price of a pair of noble bird shoes was about 100 yuan, and the new product was about 200 yuan. According to the price of the county, the consumption was not low, especially for the students, but they would still tighten their belts and save pocket money to buy them." She added.

Around 2008, with the east wind of the Beijing Olympic Games, the domestic sporting goods industry ushered in a highlight moment - according to media reports, there were 15 brand stores with more than 3000 stores at that time.

At that time, international brands were far less popular than they are today. Domestic consumers, especially those in the sinking market, did not have a high recognition of brands such as Nike and Adidas, while domestic brands such as Anta, Li Ning and guirenniao were generally sought after by young people at that time.

According to Euromonitor International data, in 2008, the market share of Nike and Adidas in China's sports shoes and clothing market was in the top two, with local brands in the bottom. This year, the noble bird market accounted for 3%, ranking second only to Li Ning, Anta, Tebu and 361 degrees among domestic sports shoes and clothing brands.

The highlight time of the noble bird is after the launch. On January 24, 2014, the noble bird was successfully listed on the Shanghai Stock Exchange, known as "the first stock of A-share sports brand", which had no difference for a time.

In 2015, the stock market was bullish. Meanwhile, the noble bird kept telling new "capital stories". The stock price also rose. In May 2015, it reached a high of 67.92 yuan per share, with a market value of more than 41.7 billion yuan. In the same year, Lin Tianfu, founder of the noble bird, became the richest man in Quanzhou with a fortune of 19 billion yuan.

However, as of November 13 this year, the market value of guirenniao was only less than 1.3 billion yuan, which was more than 40 billion yuan less than that during the period of the Republic of China.

Why did the once popular noble bird decline in just a few years?

"The decline of the noble bird is actually brought into the pit by capital." Cheng Weixiong, an expert in textile and garment brand management and general manager of Shanghai Liangqi Brand Management Co., Ltd., commented on the "finance and economics".

He said that if it is not listed, the noble bird may be able to live very well today. However, after the listing of the noble bird, the diversified investment in the pan sports ecosystem outside the main business leads to the difficulty of short-term realization of the return on investment in the face of macro-financial regulation and control, which makes it difficult for the main industry to drive the huge pan sports ecosystem layout investment and bear the debt pressure brought by it.

So, in terms of capital operation, what did the noble bird do wrong?

2. Crazy expansion buries mines

The first decade of this century is considered to be the "golden decade" of China's sporting goods industry. The industry grows at a high speed of 30% - 50% every year. Li Ning, Anta, 361 degree, Tebu and peak, etc. have all gone to Hong Kong stock market in the golden decade and successfully entered the capital market.

However, after 2010, when the dividends brought by the Beijing Olympic Games were exhausted and the demand weakened, the sports industry's previous expansion also brought about the problems of supply surplus and overstock of inventory. As the industry entered the winter, the noble bird was no exception.

At that time, it was like selling sports brands everywhere Yang recalled that in 2010, she went to university in other provincial capitals. As her knowledge increased, her image of "fashionable and high-end" in her mind gradually faded.

"On the same commercial street, compared with international brands such as Nike, ADI and new balance, the location of the noble bird shop is much more remote, and the styles of clothes and shoes inside are much inferior. You can't even find shops in some business districts. "

According to Euromonitor International data, after 2008, the market share of guirenniao in China's sports shoes and clothing market has been declining. From 2009 to 2013, the market share of guirenniao dropped to 2.6%, 1.9%, 1.7%, 1.5% and 1.1%, respectively, which was left behind by brands such as Li Ning, Anta, Tebu and 361 degrees.

Photo / Euromonitor, Liding Industrial Research Center

From this point of view, the noble bird continued to expand to non main business areas after its listing in 2014, which may also be due to the decline of its main business.

After listing, the noble bird began to transform from the traditional sports shoes and clothing industry to the pan sports industry, and launched a variety of dazzling investment and merger activities around the sports industry, which lasted until 2017.

The noble bird once spent 239 million yuan to become a shareholder of Hupu sports. Since then, guirenniao has invested 1 billion yuan in advance, jointly launched a sports industry investment fund with a total scale of 2 billion yuan with Hupu and Jinglin investment, and established Kangpaisi with China University Sports Association and Hupu to cut into the sports industry of college students.

In addition, the noble bird also invested 65 million yuan to jointly set up Xiang'an insurance with Rongyi technology to lay out the sports insurance field, and invested 20 million euro to invest in the Spanish football brokerage company boy to promote the sports brokerage business.

As for the introduction of overseas brands, guirenniao plans to introduce the basketball equipment brand and1 to seek its trademark operation right in Greater China, with a minimum guarantee of US $26.0372 million, and won the market authorization of Prince in China and South Korea at the price of 20 million euro.

In terms of sports shoes and clothing sales, kingbird invested 383 million yuan to acquire 50.01% equity of sports product retailer Jie Zhixing, and 150 million yuan to acquire 45.45% equity of Hubei Shengdao sports. And successively invested 750 million yuan to obtain 100% equity of mingshoku, a sports brand online retailer.

The most shocking thing to the market is that guirenniao plans to purchase 100% equity of Weikang fitness with 2.7 billion yuan. The guirenniao plans to pay the purchase price by issuing shares and cash, and only the cash part will pay 675 million yuan.

At that time, some media pointed out that if Weikang fitness was calculated according to the price earnings ratio valuation method, the PE (price earnings ratio) of the noble bird's acquisition of Weikang fitness was almost 70 times. Such a high PE valuation does not conform to the conventional investment logic. The deal, which was also questioned by the Shanghai Stock Exchange, failed.

There are many expansion measures. The noble bird also planned to change its name to "all-around sports", which shows its ambition in the sports field.

But capital expansion did not make the noble bird rise successfully.

Since 2012, the noble bird's net profit has been on a continuous decline channel, only a small increase in 2015. By 2018, the net profit of guirenniao will change from profit to loss, with a loss of 668 million yuan. In 2019, the loss will be expanded to 1.02 billion yuan.

"The investment in Pan sports ecology is a medium and long-term process, but in the short term, the main business of the noble bird can not support the medium and long-term investment, and the financial regulation and control is even worse." Cheng Weixiong commented.

3. The opposite of life

In any industry, every crisis is a reshuffle, mediocre companies fall, excellent companies rise, and survivors follow the times again. Nowadays, in addition to Anta and Li Ning, most of the other brands and noble birds listed in the golden decade are on the decline.

It is worth noting that Anta and noble bird have something in common in capital operation, which is to expand the company's territory through continuous acquisition.

In 2009, Anta acquired the trademark right and franchise of FILA brand in China from Baili. Today, FILA brand revenue has accounted for nearly 50% of Anta's revenue.

Since then, Anta has acquired the British outdoor brand sprandi, established a joint venture company to operate Japanese skiing equipment brand Descente in mainland China, and acquired xiaoxiaoniu from Hong Kong, China, to boost the children's wear market.

In March 2019, an investor consortium composed of Anta sports, Fangyuan capital, anamered investments and Tencent completed the acquisition of Amer sports and its brands Archaeopteryx, Salomon and Wilson.

According to media reports, Anta has nearly 30 brands.

Graph / photo net based on VRF protocol

Recently, news from the market said that Reebok, an old American fitness brand with a history of 125 years, may change its ownership again. It is rumored that Anta intends to acquire it.

However, unlike the noble bird, Anta has become the sports brand of China's sports. As of November 6, Anta's share price closed at HK $101.1, breaking 100 yuan, a record high, and the highest share price of Listed Companies in Jinjiang, with a total market value of 273.307 billion yuan.

But I do not know from when, the noble bird has disappeared in Yang Canyue's hometown county. "Now Nike, ADI, China's Li Ning and Anta all have exclusive stores in the county, but I haven't seen other domestic brands that I was familiar with in high school for a long time."

According to the information disclosed in the 2014 financial report, the number of retail terminals reached 5560 at the end of 2013, but since then, hundreds of stores have been closed every year.

By the end of September this year, guirenniao closed 469 Direct stores and 234 franchise agents, leaving 230 and 1425 respectively. The total number decreased by 3905 compared with the end of 2013.

Why do the two companies have different fates?

In Cheng Weixiong's opinion, Anta and noble bird are in the same direction, and both want to make the enterprise bigger and stronger. But Anta is the brand matrix, while the noble bird is to build a closed loop of sports ecology. It is relatively easier to build a brand, but it is more challenging to build a closed-loop ecological platform, which brings greater risks.

Thus, capital has a dual character. When the capital is operated properly, it can boost the enterprise to the top; once the direction deviates, the capital will become difficult to control, and even pull the enterprise into the abyss.

4. Capital sequelae

It is easy to lose weight when you climb high. In retrospect, although the noble bird has made great efforts in capital operation, some of its investments are quite casual and can not stand up to scrutiny.

For example, if the company's equity was less than 65 million yuan, the company ended up with 65 million yuan of investment. The reason is that, according to the relevant regulatory requirements, guirenniao is a foreign holding enterprise with a high proportion of shares in Xiangan insurance, which does not meet the requirements for foreign enterprises to participate in insurance companies in China.

When the main business can not support the expansion ambition, in the days when the noble bird funds are tight, it also frequently sells assets to return blood.

For example, the noble bird transferred its 13.66% equity of Hupu sports at a price of 273 million yuan to repay the loan. In addition, the 37% shares of Kangpaisi sports and Kangpaisi consulting were transferred to Jinjiang National Sports City Co., Ltd. at a price of 135 million yuan and 8114200 yuan respectively.

At the end of 2018, the noble bird announced that it would sell 50.01% equity of jiezhixing at a price of 300 million yuan. It is worth noting that this transaction is already a loss making business - in 2016, the price of noble bird's acquisition of 50.01% equity of jiezhixing was 383 million yuan.

However, the sale of jiezhixing's equity has been completed for nearly two years. On October 31, guirenniao announced that because Chen Guangxiong, the transferee of jiezhixing equity, failed to pay the equity transfer payment as agreed, guirenniao has sued Chen Guangxiong to the court, requiring him to pay 180 million yuan of equity transfer and 34.2864 million yuan of liquidated damages.

But it is not easy to buy assets back.

Today, the noble bird is still paying for the blind expansion of the behavior, Jie's trip has become a noble bird's burden. In the third quarter financial report, guirenniao disclosed that the investment income changed from - 844600 yuan in the same period of last year to - 8.9786 million yuan, which was due to the loss of jiezhixing.

In fact, the noble bird has tried to refocus on its main business.

At the end of 2018, guirenniao announced to optimize the sales mode, gradually transforming the original part of the traditional noble bird brand distribution and authorization cooperation mode into the quasi direct marketing cooperation mode. It plans to purchase the sales channels of the noble bird brand business dealers with 147 million yuan. After the channels are recovered, guirenniao will spend another 419 million yuan to recover the inventory in the hands of dealers.

This is quite similar to Anta's recent transformation in the main brand.

The acquisition of FILA helped Anta rise, but Anta also fell into the "capital sequelae", and the symptom was the "weakness" of its main business.

In the first half of 2020, Anta's main brand decreased by 10.7% to 6.777 billion yuan, with a gross profit margin of 41.6%. Meanwhile, FILA's revenue increased by 9.4% to 7.152 billion yuan, with a gross profit margin of 70.5%. Both of them have realized the anti surpassing of Anta's main brands.

Graph / photo net based on VRF protocol

The outside world even has "is Anta's FILA? Is it FILA's or Anta's? " The voice of doubt appeared.

However, in Cheng Weixiong's opinion, the fact that Anta's main brand has been overtaken by FILA does not mean that it relies too much on capital operation. It relies more on opening up its territory through comprehensive direct marketing and achieves rapid growth in performance through extensive development. Once the market coverage reaches a certain level, the growth rate will naturally slow down.

"We can understand that Anfield is beyond the mainstream of fashion. Popular Anta is low-grade and cost-effective. It can only play in the Red Sea game of sinking market. Its competitive advantage is not obvious. As a leading brand, Feile has a leading advantage in the middle and high-end market. " He further said.

Starting from the second half of this year, Anta, like the noble bird at the end of 2018, has rapidly transformed into direct marketing, announcing that Anta's main brand will transform from "wholesale and distribution retail mode" to "direct retail mode facing consumers".

In Cheng Weixiong's opinion, Anta's transformation of retail mode can effectively control the accessibility and convenience among brands, products, channels and users. It is more decentralized and flat operation, which is more conducive to timely upload and release, and to reach the bottom line. The operation efficiency has been greatly improved, which is conducive to the superposition of multi brand operation efficiency.

However, this is bound to be a long battle. As of the first half of this year, Anta has 10197 main brand stores. According to Anta's plan, the proportion of Direct stores will reach 70% in 2025.

Will Anta still stay in Anta's hands after the market that depends on dealers has turned to direct marketing in an all-round way? And whether Anta's capital can sustain the high cost of transformation? In the golden decade of China's sporting goods industry, Anta has led the first half of the rise of local brands; in the second half, apart from the crown of domestic sporting goods, Anta still has a broader market to explore.

5. Conclusion

Facts have proved that China's sports market has consumption power and strong manufacturing capacity. Even a number of domestic brands such as Tebu, 361 degree, noble bird and hongxingerke have emerged. However, at present, except Anta and Li Ning, these brands will inevitably decline, and domestic sports brands are still difficult to compete with foreign brands.

In terms of brand development and brand premium, it is still the reason to focus on domestic brand and international brand promotion. The research on the needs of users and brands is still not enough Cheng Weixiong told "finance and economics".

In his opinion, the investment of local brands in brands, products and channels determines how far local brands can go in the future and how strong their ability to compete with international brands in the future.

Simple capital operation can not support the long-term survival of a consumer brand, just as the noble bird wants to tell a grand capital story, but accelerates its own fall.

In recent years, sports shoes and clothing industry has entered a high boom state again, and domestic brands also ushered in the opportunity of rising again. It is difficult for the noble bird to get rid of the crisis again.

China's sports shoes and clothing industry's leading pattern has been stable, whether Anta or Li Ning's status has become difficult to shake. In addition to domestic brands, many international brands such as Nike and Adi are also competing in the market.

It's not easy to fight and defend. It's not easy to make a comeback after the decline. The road in front of the noble birds is still full of thorns.




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