Yan Younger, who threatened to “return†to the main business of clothing, did not “stretch the frontâ€; on the contrary, he had a generous hand. Youngor recently announced that its wholly-owned subsidiary, Youngor Real Estate Co., Ltd. won the largest residential land in Ningbo's central district of Cangzhou, with a bid price of 1.028 billion yuan and a converted floor price of 8,707 yuan per square meter. With the warming of the real estate industry and the capital market, Youngor was "ready to move." The paradox lies in: In the face of interest temptation, what are the future long-term profitability directions and core competitiveness? Hard to resist temptation Looking at Youngor's 2008 annual report, Youngor currently has a land bank with a floor area of ​​approximately 4.48 million square meters, which is sufficient to support the development of the next three years. With real estate warming up, Younger’s once-repressed takeover enthusiasm was once again ignited. As a veteran who entered the real estate market in 1992, after entering the year 2000, Youngor suddenly increased his investment in the real estate field and claimed that he intends to turn the real estate business into a national real estate company within five years. At one time, Youngor proposed to split the real estate segment. However, the outside world once worried that high-priced land reserves will become the operating burden of Youngor in the coming years. In an interview with the media, Youngor’s head, Li Rucheng, acknowledged that a large-scale adjustment of the national real estate market was imminent. To this end, Li Rucheng set the next round of real estate business strategy for Youngor: "To control, selectively slow down the pace of investment and development, and make certain adjustments." He said that Youngor will use static brakes, plans to move, and do not blindly purchase land. At the same time, capital market risks have increased and Youngor’s equity investment business has been repeatedly shrunk. Youngor reported in the third quarter of 2008 that the market value of the company’s securities investment projects has dropped from 13.5 billion yuan in early 2008 to 10.4 billion yuan, and the company’s net profit has dropped by 43.55% year-on-year. Based on the consideration of capital market risks, Li Rucheng personally led the establishment of Kaishi Investment Co., Ltd. at the end of 2008. A professional team assisted in managing some of the existing financial assets and tried to gradually transfer the investment business from the stock company to the group company. To operate at the level to reduce risk. Unreliable main business The once-great success in real estate and equity investment has almost obscured the main business of Youngor. Looking through the annual report of Youngor in recent years, it is not hard to find that the contribution of clothing to Youngor’s profits is getting smaller and smaller. In 2002, Youngor’s total sales revenue was 2.4 billion yuan, and the total revenue of shirts and suits was 1.3 billion yuan, accounting for 54% of the total sales. In 2006, its sales revenue was 6 billion yuan, of which the total revenue of shirts and suits was 1.7 billion yuan, accounting for only 28%. During this period, real estate income increased from 500 million yuan in 2002 to 1.9 billion yuan in 2006, an increase of 280%. In addition, due to the successful investment in CITIC Securities, Ningbo Bank, Sino-foreign trade and other shares of a number of companies, Youngor's share price rose. The economic situation is grim, and the market is increasingly concerned about Youngor's real estate and equity investment business. Youngor began to try to return to the main business. Chen Zhigao, vice president of Youngor Group, even said that Youngor has established a goal of 20% growth in apparel sales in 2009. "Younger has never strayed from his main business. Clothing has always been the basis of Youngor. We have been doing it very hard." In an interview, Li Rucheng responded. Although Youngor claims that he will not give up his main business, it is very difficult to achieve a major breakthrough in the fashion industry. Wang Rong, an analyst at United Securities, has long been committed to Youngor's research and has repeatedly visited Youngor. In her view, one of the major difficulties of Youngor's apparel industry lies in its inability to evade its existing product design and brand operation deficiencies and risks. “Younger has begun to face a bottleneck in the domestic sales of apparel, that is, the space for further increase in market share has been More and more limited, the growing ceiling is faintly visible." In this regard, Youngor Dong Liu Miyu, the company is taking a further strategy to expand the domestic apparel market, including the promotion of the new brand HSM. The cultivation of new brands does not happen overnight. Wang Rong introduced that the introduction of new brands usually takes 3 to 5 years of incubation period, which means that Younger is unlikely to benefit from the new brand in the past two years. In addition, people in the industry are not optimistic about the current apparel market. Zhang Bin, an analyst with Guojin Securities, told the author that the current situation in the textile industry is not optimistic. In 2009, overall exports may be negative growth, and revenue may be flat or single-digit growth. Industry Puzzle What is Youngor's future development direction and industry profitability? This is a long-standing problem for Youngor. Although the current industry's recovery trend has positively promoted Youngor's stock price increase, as the capital market picks up, the risk of equity investment also gradually spreads. However, the division of various businesses of Youngor has gradually emerged. In Wang Rong's view, the profitability of Younger's traditional main textile and apparel industry has slightly decreased. In particular, the income growth rate and profitability of the textile business are slowing down. There is limited room for improvement in the apparel business. Previously, the contribution of real estate business and equity investment income to net profit has been very significant, reaching 53%, which is significantly higher than the traditional main business, once covering the light of the main business. What are the company's future development strategies for textile and apparel, real estate business and equity investment? This is a secret topic within Youngor. In contact with the author of “China Businessâ€, the director secret Liu Xinyu just repeatedly emphasized that “our current three major businesses all attach great importance. Youngor hopes to establish a three-tier business chain growth mode. The cash flow of textile and clothing can be used to feed back the capital-intensive. The real estate industry and financial investment provide the entire enterprise with a “financial reservoir†type of protection and development space, and a positive interaction between the three can be formed.â€
Although the current industry's recovery trend has positively promoted Youngor's stock price increase, as the capital market picks up, the risk of equity investment also gradually spreads. However, the division of various businesses of Youngor has gradually emerged.