Clothing big Youngor: Left-handed real estate right-handed financial?

Changing to profit and silence, which approach can make Chinese textile and garment companies live longer? This hard-to-answer question is just like the famous monologue in Shakespeare's Hamlet, "It is a question whether survival or destruction is a problem".

In the past few years, the textile and apparel companies have been frequently involved in real estate and finance. In this regard, we may regard it as their helpless performance of the main business conditions. From the obscurity of 30 years ago, China’s big suits and big shirts were made, and then it was backtracked to run dyeing factories to dye cloth. The industry’s leading company, Youngor, was really tired.

Once upon a time, Youngor’s chairman Li Rucheng began to calculate industrial expansion, shareholding restructuring, and listing, and made high-profile investments in real estate and financial investments. Judging from past reports of listed companies, Youngor has achieved excellent records in both real estate and capital markets.

However, from 2009 onwards, news of Younger’s investment in the securities business had fallen short of revenue and real estate revenue fell sharply.

According to Youngor’s quarterly report this year, during the reporting period, Youngor’s investment income was 206 million yuan, a decrease of 61.99% from the same period of last year, including disposal of trading financial assets and available-for-sale financial assets to obtain a gain of 185 million yuan, eliminating financial investment business. The net cost of the cost and interest expenses was 21 million yuan, a substantial decrease from the net profit of 265 million yuan in the same period of last year.

As a large-scale private enterprise in Ningbo, Youngor has entered the real estate industry on a large scale and has frequently become the land king of Ningbo, Hangzhou and Suzhou at high prices. The rise in housing prices and the sharp increase in profits are a huge temptation for apparel companies with low profits, small industry space, and fierce competition.

After 1998, Youngor began to expand significantly in the real estate industry with various advantages in Ningbo. Moreover, under the pressure of real estate regulation, Youngor still spends heavily on land, and has to use high-end positioning to build homes for sale. However, home buyers in the Yangtze River Delta do not buy it. On the other hand, the implementation of the purchase restriction policy has greatly influenced Youngor's development.

The 2011 annual report shows that Youngor's branded clothing operating margin was 65.66%, while property development profit margin was only 44.75%. Some people have done statistics. In most years from 2007 to 2011, Youngor's real estate business has occupied more than 10 billion yuan of funds, and the net profit of real estate has reached nearly 3 billion yuan, with an average annual income of about 600 million yuan.

Such gains are even lower than the one-year bank loan interest rate. Right now, Youngor's book cash is 3.23 billion yuan, but it has to deal with short-term interest-bearing liabilities of 17.46 billion yuan. Under such pressure of debt service, Youngor did not acquire land in the first half of 2012 and temporarily did not expand its real estate business. Even so, Youngor's inventory of 21.152 billion yuan at the end of last year made the company run on thin ice.

In poor conditions, there are also sweet gains. From 2009 to 2011, Youngor's financial investment business achieved net profits of approximately 1.625 billion yuan, 1.245 billion yuan, and 487 million yuan, respectively, and contributed more than 30% to the company's annual net profit.

However, by 2011, with the decline of the macro economy, the A-share market continued to fall, most stock prices were smashed, and many fixed-income stocks were severely broken. In 2011, Youngor participated in the private placement of 13 listed companies. The cumulative investment amount was 2.725 billion yuan, and there were eight consecutive sets of private placements.

In the fierce market environment, the book value of the 13 companies held by Youngor has shrunk by more than RMB 1.6 billion. Perhaps Youngor is dissatisfied with the performance of last year. Since this year, Youngor has not appeared on the list of any additional public offerings of listed companies.

Faced with the above operating conditions, Li Rucheng proposed a solution: “Strictly control the investment in real estate, adjust the scale of investment in a timely manner, and concentrate resources on branded apparel. It was originally a three-legged walk. It is now dominated by clothing and the other two industries. auxiliary."

As stated in the text, the author does not intend to judge the company’s diversification strategy. It is exactly the mind of a netizen that makes everyone feel empathy: Youngor moved to real estate finance in 2010 is a very wise choice because of the apparel industry’s The profits have already reached the point where there is no way to continue.

However, because of the high returns and high profits that linger on real estate finances, they have indeed lost their heads. Certainly, they do not have the right practices. At present, many companies are facing a transformation, but they do not have diamonds and can't turn around beautifully. It is believed that this confusion is not a Younger company.

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