Announcement of Announcement of Announcement of 1.5 billion Online Shoppers

On June 1st, the China Securities Regulatory Commission announced that it had approved the request for the increase of no more than 100 million new shares in the company. The newspaper's use of funds for raising funds did not exceed 1.5 billion yuan. The purpose of the raised funds was to build the marketing network, mainly for the purchase of shops.

For a clothing company, it is natural to raise funds to buy new stores and set up outlets to achieve extensional development. However, some market participants pointed out that in the past, Baonongsheng had repeatedly adjusted its fund-raising and buying of new stores, and changed many new stores into rented ones. Not only that, but another observer pointed out that in 2011, the cash flow disclosed in the report was inconsistent with the income, the inconsistency between the accounts receivable of the same customer, and the possibility of false statements.

The Annoyed Bird's Misleading Account

In fact, as early as 2010, A-share anti-counterfeiting expert Xia Cao wrote a special article stating: The annual gross profit margin of Qixin Bird is inconsistent with its scale, and the company was suspected of concealing e-commerce losses and related issues such as unrelated acquisition.

Looking at the annual report disclosed not long ago: April 17th, the annual report published by Baoxi Bird showed that the company’s operating income increased by 61% year-on-year to 20.3 billion yuan, net profit was 368 million yuan, an increase of 51.66% year-on-year, and the results were quite encouraging. However, the increase in revenue and profits does not come from real money, but rather represents a year-on-year increase in accounts receivable. In 2011, accounts receivable of Baoxi Group soared by 172% year-on-year to RMB717 million, while operating cash flow dropped drastically to RMB-711 million. The reason given by the company was to increase the ratio of sales to outstanding franchisees. From the same period in 2010 more than 300 million cash flow can be said to dwarf.

At this time, some media pointed out immediately that the cash flow and income disclosed by the Annunciation could not be matched. The difference between the cash flow and the income was about 300 million. The reason may be that there was no full offset between internal transactions. However, there are also problems with accounts receivable: the same accounts with different accounts have the same amount of accounts but different ages, while the provision for bad debts is based on the age of the accounts, which directly corresponds to inflated profits. The total amount of accounts is about 65 million.

The Annunciation quickly responded with actions. On June 19th, the company released an updated annual report, which admitted that “because of staff negligence, there was a typo in the aging description of other receivables in the full text of the annual report,” and the new annual report would The 2nd, 4th, and 5th of the top 5 accounts receivable were all within 1 year, and were adjusted within 1 year and 1 to 2 years respectively. They also stated that the 2011 financial statements of the company were prepared correctly. The provision for bad debts of accounts receivable has actually been accrued based on the corrected age. Therefore, this correction does not affect the results of the 2011 financial statements and has no impact on the company's 2011 annual results.

In fact, the bad debt accruals for different years are different. Take Xiao for example. Within 1 year, it is based on 5%. For 1-2 years, it is 10%. Each year thereafter, bad debt provision is made. It is 20%, 50% and 80%. According to its disclosed second non-related party, the balance of accounts receivable is 13.81 million yuan, the original age is within one year, and after correction is 1.50.8 million yuan within one year, 1-2 years 1230 Ten thousand yuan is calculated on these two different calibers. Before and after the bad debts are far from each other.

According to the latest correction announcement of Baoxiu, the provision for bad debts was based on the corrected ageing. Although the account was wrong, the bad debts did not raise any error. How high is the credibility of this claim? Guo Haiyan, an analyst at China International Capital Corporation, said: “As the company’s receivables and inventories increased, the Company’s impairment losses on assets increased 285% year-on-year to 63.87 million yuan.

The reporter consulted this with the company's analyst rating company Liu Wei, who reported that the company has a corporate debt rating. “Our ratings are based on facts, and based on the facts that happened in the past, not all rumors in the market are available. "When the reporter proposed that although the company's profit growth, but the cash flow has dropped sharply, Liu Wei said:" can only say that this company is very typical in the industry, more representative, and other said in the rating report very clear."

The data for the first quarter of 2012 remained the same: total operating revenue was 5.5 billion, an increase of 57.75%, and net profit was approximately 53 million yuan, an increase of 46.7% year-on-year, while operating cash flow remained at -3290.5 million yuan, a year-on-year decrease of 8.9%. The net profit growth in the first half of the year is expected to be between 30% and 60%. “Announcement of the Annunciation brand value continued to improve, and the expansion effect was better, and the sales growth was faster; the bird bird business continued to pick up momentum, and the benefit grew significantly compared with the same period of last year; the San Jura brand growth was in line with expectations; other brands were developing steadily.” The aspect says.

In 2011, the company's average gross sales margin was 58.87%, which was stable compared with 51.5% and 54.3% in 2009 and 2010. The reporter inquired about seven wolves in the same industry. The company's gross profit margin was about 42% in 2010 and 2011, and it was 38% in 2009. Last year, Septwolves’ operating income was 2.9 billion yuan, and net profit of 4.1 billion yuan appeared to be more of a scale advantage. However, the cash flow did not show a significant decline like a good news bird, but remained stable. While the old-fashioned men's clothing Younger's clothing gross margin in 2011 was 45.41%, Shanshan's clothing gross margin was only 24.92%.

Why is the gross margin of Annunciation so high? The joint credit rating indicates that the company's main business, suits (tops and trousers) is still the main source of income and profits, accounting for about half of all income and profit levels. In terms of gross profit margin, with the exception of jackets, the gross margins of other types of products have shown different growth rates. Among them, the gross profit rate of tops reached 60.90%, an increase of 6.27% over the previous year; the gross margin of trousers reached 59.09%, an increase of 6.37% over the previous year. As a whole, the company's main business still maintains a high level of profitability.

Open shop "strange circle"

According to Shenyin Wanguo’s estimation, the Announcement will be completed before the end of November. In fact, since its listing five years ago, the Annals reported two additional issuances and one corporate bond, totaling nearly 3 billion yuan. In addition to corporate bonds that are mainly invested in loans and supplemented working capital, fundraising projects are basically focused on marketing. Network construction is opening new stores.

In November 2011, the company's public issuance of A-shares was conditionally approved. According to the company's disclosed feasibility study report, the funds raised will be used to build 280 stores, including 180 main newspaper shops and 100 Sangios. Luo brand main store. After the project is completed, it can realize an annual sales income of 983 million yuan and an annual average profit of 316 million yuan. In 2012, the company will actively promote the above-mentioned additional issuance projects. The joint credit rating believes that the successful implementation of the issuance will further enrich the company's marketing network, accelerate the expansion of the market, and improve the company's profitability and sustainable development.

In 2011, with the integration and expansion of the company's marketing network, especially the successful implementation of the big store project and the franchisee “Giant Project”, the number and quality of sales outlets of the company have been improved, and profitability has been significantly enhanced. In 2011, the company achieved a consolidated operating income of 2 billion yuan, an increase of 61.23% over the same period last year, and a total profit of 430 million yuan, a year-on-year increase of 47.46%.

It is worth noting that rapid expansion has brought about rapid growth in company-related costs: In 2011, the company's three-period expenses reached 680 million yuan, a substantial increase of 86.46% from the previous year, and the cost-to-income ratio rose from 29.08% in the previous year to 33.63. %, The rapid increase in expenses during this period makes the increase in company profits smaller than the increase in income.

At the same time, the company's store-opening plan has also changed frequently: In 2007, the company's initial public offering prospectus, one of the fund-raising projects for the chain marketing network construction projects. The total investment of the project is 107.94 million yuan, of which 102.3 million yuan is planned to be used for raising funds. It plans to build direct-operated stores in 21 cities, and select 6 of them to build 6 flagship stores.

Several directly-operated stores are currently in the state of renting and sublease: among them, a directly-operated store at No. 6 Yatto Road, Wuhou District, Chengdu has been changed to rent to a third party, and there is also a shop at No. 294 Fuyang Road, Jiujiang City. The direct operation was changed to external lease. The 1B, 2B, and 3B shops in 63 Shangxi District, Xinglong District, Panjin City were temporarily closed due to the demolition; the shops in Units No. 115 and 116, Unit 9, Building 1, West Road, Baoding City, were changed to lease. Lanzhou The No. 5 shops at Wudu Road, Zhangye Road, Chengguan District will be temporarily leased out, and No. 13 shops in Suzhou City, Hefei will be temporarily leased. Similarly, of the 43 stores that were publicly purchased in 2009, 6 have changed their shop plans and rented out.

The above behavior of Baoxiniao confirms the suspicion that Xia Cao once put forward: “The company publicly raises funds more than the current net assets, and the main funds are used in the purchase shops. The current core competitiveness of the garment manufacturing industry is not how many shops you own, Instead, the company's R&D, brand, channel, supply chain management capabilities, etc., such as Smith Barney, production outsourcing, channels are mainly franchised stores, business models from the traditional manufacturing to supply chain management, unfortunately, A-shares high pricing The system has enabled Smith Barney to also invest funds primarily in the purchase of shops. This is actually going back to the head and turning from a light asset model back to a heavy asset model."