Rumour That YOUNGOR'S Misinvestment In Real Estate Caused Short-Term Liabilities

YOUNGOR first aid capital chain: analysts said that "getting involved in real estate is wrong". Li Rucheng reduced CITIC Securities to step on the next pace, cash in the net brought about 363 million yuan net profit, or ease the shortage of cash and short-term debt building difficulties. Who will be the most fry in the volatile Chinese A share market?

It is not Mr. X, but Li Rucheng and his YOUNGOR (600177.SH).

According to YOUNGOR's announcement, as of November 11, 2008, YOUNGOR's 600030.SH stake was reduced to 217 million shares. According to the 244 million shares of CITIC Securities disclosed in the three quarter of October 1st, YOUNGOR has reduced the number of shares of certificates of trust to more than 26 million 700 thousand shares in a month's time, selling shares at about 19 yuan per share, involving nearly 500 million yuan.

The cost of these 26 million 700 thousand shares is only 0.86 yuan, plus 25% of the income tax, which will bring YOUNGOR 363 million yuan net profit and increase earnings per share by 0.163 yuan.

In the first three quarters, the net profit of the company was only 2 billion 156 million yuan, achieving a profit of 0.97 yuan per share.

That is to say, the massive equity reduction completed by YOUNGOR from October 1st to November completed the net profit of 16% in the first three quarters of 11.

Speculation has become YOUNGOR's biggest earning power.

The cash flow pressure has become a soft spot that YOUNGOR can not avoid.

According to the strategic classification of the company, the main industry of the three carriages that drive the development of the company's business, the clothing industry provides cash flow for the company, the real estate industry provides large profits, and financial investment is added to the seed business.

But with the recent expansion of the international financial turmoil, the company's clothing export business has been greatly affected.

On the other hand, the downturn in the property market also makes the company's cash flow recovery lower than expected, but real estate investment continues.

"Short term loans account for 21.3% of total assets, and long-term loans and short-term loans account for 29.16% of total assets.

This shows that the company's cash flow is not a small problem, the reduction of CITIC equity, should not exclude the purpose of cash expansion cash flow.

Ma Li securities analyst Marie pointed out that "the reduction will directly bring about 500 million yuan in book cash, which will help to alleviate the unfavorable situation in the three quarter report, which is only 1 billion 684 million 900 thousand yuan in cash and 7 billion 337 million 300 thousand yuan in short-term liabilities."

The question of YOUNGOR's cash flow pressure has not been recognized by the company. YOUNGOR's director Liu Xinyu only said that the company has made a public announcement in accordance with the relevant regulations and requirements regarding the reduction of CITIC Securities equity.

The company's capital situation is normal, and there is no financial pressure.

Although Liu Xinyu refused to confirm the problem of cash flow, the problem of cash withdrawal from the real estate industry has become an indisputable fact.

Mary Li said that if YOUNGOR's balance sheet condition is sustained, if the real estate sales slump persists, the company will continue to sell CITIC Securities and other equity rights at the right price.

In response, Liu Xinyu responded: "whether or not to continue to sell shares" must be decided by the highest decision-making level of the company.

YOUNGOR is a famous clothing brand in China. This Ningbo garment enterprise, named "Youth", has grown from a small local workshop to a well-known clothing group in the country. Its achievements in the clothing industry have contributed greatly.

However, as the company's investment in other fields is increasing, the "clothing main business", which is the foundation of establishing a home, is showing signs of being sidelined.

"Apart from the stock and real estate investment business, YOUNGOR's other businesses have become insignificant."

This is the evaluation of foreign analysts.

So how does this company turn into a stock and real estate company that produces suits and shirts?

Since 2002, the company has emphasized investment in real estate every year.

After several years of development, real estate has surpassed textile and clothing as YOUNGOR's business growth engine.

In 2002, sales of shirts and Western-style clothes were 1 billion 300 million yuan, 1 billion 700 million yuan in 2006, and real estate income increased from 500 million yuan in 2002 to 1 billion 900 million yuan in 2006, an increase of 280%.

In addition to investment in real estate, financial investment has also grown rapidly to become the "third carriages" to drive YOUNGOR growth.

As of October 30th, the total market capitalization of financial assets held by the company was 10 billion 420 million yuan, with a floating profit of 6 billion 320 million yuan.

Most of the financial assets held by the company come from the primary market, of which CITIC Securities has 243 million shares at the end of the three quarter, with a face value of 6 billion 38 million yuan, and Haitong Securities 200 million shares, with a face value of 4 billion 200 million yuan.

Objectively speaking, YOUNGOR's profitability in the apparel industry has not declined.

According to the forecast, the company's clothing domestic sales growth is good, it is expected to achieve sales income of 3 billion yuan in 2008, gross margin reached 73%.

But compared to the investment in real estate and finance, the development speed of the main garment industry has slowed down obviously.

"YOUNGOR's deviation from the main garment industry is at least uneconomical in terms of valuation," a company researcher told reporters: "YOUNGOR apparel has a high gross profit margin and can support PE, but the PE of the real estate industry is definitely not high. The PE valuation of the company will be pulled down, which is not particularly cost-effective."

Li Rucheng's reduction method is comparable to that of YOUNGOR Shenyang YOUNGOR, which used to sell shares in the two tier market many times in Shenyang Wanguo Ningbo Liang Liang business department account. It made a huge profit. With a little combing, it can see the elegant demeanor of A stock.

In the "9. 19" market, some stock gains have been huge, and CITIC Securities is one of them.

The lowest price of the stock in September 18th was 15.42 yuan, but after 6 trading days, the highest price rose to 24.92 yuan, and the largest increase was 61.6%.

After the national day, the market quickly turned to empty. In October 7th CITIC Securities closed down. On the 8 day, it was still on the low side. There was a huge sell-off of CITIC Securities 187 million yuan on that day. It is very likely that YOUNGOR is reducing its holdings.

The sales department sold CITIC 187 million yuan in October 8th, ranking first in the selling seats, and the largest number in the current round of reduction. The closing price for that day is 20.8 yuan, which is relatively high in recent months.

When YOUNGOR rises, it chooses to sell at a high level. From the perspective of timing, it can be seen that it is very clever.

CITIC Securities again rebounded slightly, the stock rose to around 23 yuan, and the seat still did not let go of the opportunity, from October 9th to 13, three trading days to sell 204 million yuan.

In November 4th, the seat sold 81 million 580 thousand yuan of CITIC Securities, which is the lowest point in the latest month. Then CITIC Securities began to rally, and on November, 10 and 11, the seat sold 142 million CITIC Securities, which is also at a high level from now on.

This time, the two seats were sold at a high rebound point, indicating that the stock speculates really have great strength.

From the history of the sell-off of CITIC Securities, many times it is at a high level.