Li Ning's Two-Year Revolution Still Falls into a Muddy Muddy Date:2014-11-18 10:26
Gymnastics trained me and made me, but from a business point of view, this decision is good for the company. This is Li Ning's executive chairman Li Ning's response to the 23-year-old China National Gymnastics Team. This statement not only shows Li Ning's determination to make changes in the company, but also implies the difficulty of the company's channel reform.
As early as 2012, Li Ning Company stated that it will carry out unprecedented channel reforms. However, after two years of profound changes, it was still stuck in a quagmire of huge losses.
The semi-annual report shows that despite the increase in gross profit margin, Li Ning’s first-half loss was increased from 184 million yuan in the same period last year to 586 million yuan. De-stocking adjustments are still high for more than two years. Li Ning, who struggled in losses for two consecutive years, has not yet come out of this vortex.
21st Century Business Herald according to WIND data combing statistics found that in several Hong Kong stocks listed in the semi-annual report listed sports brand companies, Li Ning's inventory turnover rate is the lowest. In addition, the financial risk of Li Ning is worrying. During the reporting period, the proportion of property rights of the company far exceeded that of the industry.
The effectiveness of the reforms has not been realized, and inventory destocking has been slow. The financial situation is not optimistic. Many international companies have therefore downgraded Li Ning's stock rating.
Inventory turnover rate is lower than the industry
On August 14, Li Ning’s mid-year report showed that it achieved revenue of RMB 3.137 billion in the first half of the year, an increase of 8% year-on-year. Gross profit was RMB 1.4 billion, an increase of 10.51% year-on-year, and gross profit margin increased from 43.6% to 44.6%.
However, Li Ning’s net profit loss for the first half of the year was as high as 586 million yuan. At the same time, net cash and cash equivalents decreased by 371 million yuan.
Regarding this performance disappointing investors, Li Ning, executive chairman of the group, stated that Li Ning will unwaveringly advance the reform plan, but its effectiveness will still need to be reflected in its financial performance.
Revenue and gross profit margin increased, and net profit was in huge losses. The financial report data shows that a large number of inventories, allowances for bad debts and manpower costs are the main factors affecting Li Ning’s performance during the current period.
As of the end of June, Li Ning's inventory increased from the current 942 million yuan at the end of last year to the current 1.089 billion yuan. This figure approached 1.138 billion yuan at the end of the first half of 2012, the highest point of Li Ning's inventory.
It is worth noting that in the structure of inventories, the finished product was 1.405 billion yuan, which represented a larger increase than the 1.23 billion yuan at the end of last year; raw materials and semi-finished products totaled 85.4 million yuan, which was less than the 94.23 million yuan at the end of last year. Moreover, after deducting the net realizable value of inventories from the provision of 400 million yuan, the final inventory was only 1.09 billion yuan. Statistics from the 21st Century Business Herald reporter WIND found that during the reporting period, Li Ning’s inventory turnover was only 1.71 times, and the turnover days were 106 days. The inventory turnover rate is lower than that of ANTA Sports, Peak Sports, Xtep International and 361 degrees in the same industry. The inventory turnover rates of the four companies in the first half of the year were 3.06, 2.07, 1.94, and 3.06, respectively, and the corresponding inventory turnover days were 59 days, 87 days, 93 days, and 59 days, respectively.
As for the progress of destocking, Jin Zhenjun, executive vice president of Li Ning Group, said that from the current inventory of the company, the company’s old inventories fell by about 38%, of which the stocks of more than two years were almost completely cleared, only about 20% remained for more than 1 year, and new stocks were also in stock. The proportion has also increased to 50%. Jin Zhenjun believes that new products will gradually bring support for revenue, and the sales growth of new products will be the fastest. Although Li Ning executives are optimistic about the company's destocking prospects, they have not received market recognition.
On July 17, after Li Ning Company issued a profit warning, the company's stock price fell nearly 20% in the four trading days thereafter. On August 14, after the release of the semi-annual report, Li Ning’s stock price continued to fall again, with a cumulative drop of over 12%. International big companies have also lowered Li Ning's stock rating.
Citi maintained Li Ning's sales rating and lowered Li Ning's target price from 5.1 yuan to 4.3 yuan. Goldman Sachs will directly out of Li Ning stocks out of the Asia-Pacific region to buy the list, rating down to neutral.
It is also worth noting that the financial status of Li Ning is also not optimistic. The semi-annual report shows that Li Ning's equity ratio (debt/owner equity) is as high as 142%. The percentages of ANTA Sports, Peak Sports, Xtep International and 361 Degrees listed on the Hong Kong Stock Exchange were 44%, 37%, 68% and 53% respectively.
The long road to change
From the 2013 annual report and some of the 2014 mid-term report data of sports shoes and apparel enterprises, the performance of the sportswear and apparel industry continued to improve, and the industry’s warming trend was established. Securities analyst Heng Kun said.
Take Anta, a Hong Kong-listed company, and the elegant bird of A-shares (12.42, 0.18, 1.47%) (603555.sh) as an example, Anta's 2014 mid-year revenue increased by 22.4% and net profit increased by 28.3%; the noble bird’s net profit for the first half of the year There was a decline, but at the end of June 2014, the inventory of the company fell by over 20% from the beginning of the year. The net cash flow from operations increased by 27.84% year-on-year.
In fact, as early as 2012, Li Ning Company has begun a drastic reform and transformation in three stages: cleaning up channel inventory, improving the supply chain, and exploring business models. The semi-annual report shows that the slow progress of the Li-Ning Group's reforms and the status of a large number of stores are not negligible.
As of June 30 this year, the total number of Li Ning stores was 5,671, a net decrease of 244 compared with the end of last year; there were 52 dealers, which was a decrease of 3 compared with the end of last year.
In this regard, Li Ning’s management stated at the financial report reading meeting that the entire strategic change of Li Ning will take about three to four years. The most difficult period has now passed and it will take two years to complete the full transformation. Barclays analysts said that Li Ning's transformational reforms are only halfway. The old stocks and liabilities problem remains to be solved. It is estimated that it will not be profitable until the following year.
Gymnastics trained me and made me, but from a business point of view, this decision is good for the company. This is Li Ning's executive chairman Li Ning's response to the 23-year-old China National Gymnastics Team. This statement not only shows Li Ning's determination to make changes in the company, but also implies the difficulty of the company's channel reform.
As early as 2012, Li Ning Company stated that it will carry out unprecedented channel reforms. However, after two years of profound changes, it was still stuck in a quagmire of huge losses.
The semi-annual report shows that despite the increase in gross profit margin, Li Ning’s first-half loss was increased from 184 million yuan in the same period last year to 586 million yuan. De-stocking adjustments are still high for more than two years. Li Ning, who struggled in losses for two consecutive years, has not yet come out of this vortex.
21st Century Business Herald according to WIND data combing statistics found that in several Hong Kong stocks listed in the semi-annual report listed sports brand companies, Li Ning's inventory turnover rate is the lowest. In addition, the financial risk of Li Ning is worrying. During the reporting period, the proportion of property rights of the company far exceeded that of the industry.
The effectiveness of the reforms has not been realized, and inventory destocking has been slow. The financial situation is not optimistic. Many international companies have therefore downgraded Li Ning's stock rating.
Inventory turnover rate is lower than the industry
On August 14, Li Ning’s mid-year report showed that it achieved revenue of RMB 3.137 billion in the first half of the year, an increase of 8% year-on-year. Gross profit was RMB 1.4 billion, an increase of 10.51% year-on-year, and gross profit margin increased from 43.6% to 44.6%.
However, Li Ning’s net profit loss for the first half of the year was as high as 586 million yuan. At the same time, net cash and cash equivalents decreased by 371 million yuan.
Regarding this performance disappointing investors, Li Ning, executive chairman of the group, stated that Li Ning will unwaveringly advance the reform plan, but its effectiveness will still need to be reflected in its financial performance.
Revenue and gross profit margin increased, and net profit was in huge losses. The financial report data shows that a large number of inventories, allowances for bad debts and manpower costs are the main factors affecting Li Ning’s performance during the current period.
As of the end of June, Li Ning's inventory increased from the current 942 million yuan at the end of last year to the current 1.089 billion yuan. This figure approached 1.138 billion yuan at the end of the first half of 2012, the highest point of Li Ning's inventory.
It is worth noting that in the structure of inventories, the finished product was 1.405 billion yuan, which represented a larger increase than the 1.23 billion yuan at the end of last year; raw materials and semi-finished products totaled 85.4 million yuan, which was less than the 94.23 million yuan at the end of last year. Moreover, after deducting the net realizable value of inventories from the provision of 400 million yuan, the final inventory was only 1.09 billion yuan. Statistics from the 21st Century Business Herald reporter WIND found that during the reporting period, Li Ning’s inventory turnover was only 1.71 times, and the turnover days were 106 days. The inventory turnover rate is lower than that of ANTA Sports, Peak Sports, Xtep International and 361 degrees in the same industry. The inventory turnover rates of the four companies in the first half of the year were 3.06, 2.07, 1.94, and 3.06, respectively, and the corresponding inventory turnover days were 59 days, 87 days, 93 days, and 59 days, respectively.
As for the progress of destocking, Jin Zhenjun, executive vice president of Li Ning Group, said that from the current inventory of the company, the company’s old inventories fell by about 38%, of which the stocks of more than two years were almost completely cleared, only about 20% remained for more than 1 year, and new stocks were also in stock. The proportion has also increased to 50%. Jin Zhenjun believes that new products will gradually bring support for revenue, and the sales growth of new products will be the fastest. Although Li Ning executives are optimistic about the company's destocking prospects, they have not received market recognition.
On July 17, after Li Ning Company issued a profit warning, the company's stock price fell nearly 20% in the four trading days thereafter. On August 14, after the release of the semi-annual report, Li Ning’s stock price continued to fall again, with a cumulative drop of over 12%. International big companies have also lowered Li Ning's stock rating.
Citi maintained Li Ning's sales rating and lowered Li Ning's target price from 5.1 yuan to 4.3 yuan. Goldman Sachs will directly out of Li Ning stocks out of the Asia-Pacific region to buy the list, rating down to neutral.
It is also worth noting that the financial status of Li Ning is also not optimistic. The semi-annual report shows that Li Ning's equity ratio (debt/owner equity) is as high as 142%. The percentages of ANTA Sports, Peak Sports, Xtep International and 361 Degrees listed on the Hong Kong Stock Exchange were 44%, 37%, 68% and 53% respectively.
The long road to change
From the 2013 annual report and some of the 2014 mid-term report data of sports shoes and apparel enterprises, the performance of the sportswear and apparel industry continued to improve, and the industry’s warming trend was established. Securities analyst Heng Kun said.
Take Anta, a Hong Kong-listed company, and the elegant bird of A-shares (12.42, 0.18, 1.47%) (603555.sh) as an example, Anta's 2014 mid-year revenue increased by 22.4% and net profit increased by 28.3%; the noble bird’s net profit for the first half of the year There was a decline, but at the end of June 2014, the inventory of the company fell by over 20% from the beginning of the year. The net cash flow from operations increased by 27.84% year-on-year.
In fact, as early as 2012, Li Ning Company has begun a drastic reform and transformation in three stages: cleaning up channel inventory, improving the supply chain, and exploring business models. The semi-annual report shows that the slow progress of the Li-Ning Group's reforms and the status of a large number of stores are not negligible.
As of June 30 this year, the total number of Li Ning stores was 5,671, a net decrease of 244 compared with the end of last year; there were 52 dealers, which was a decrease of 3 compared with the end of last year.
In this regard, Li Ning’s management stated at the financial report reading meeting that the entire strategic change of Li Ning will take about three to four years. The most difficult period has now passed and it will take two years to complete the full transformation. Barclays analysts said that Li Ning's transformational reforms are only halfway. The old stocks and liabilities problem remains to be solved. It is estimated that it will not be profitable until the following year.
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