Why Over 20 Garment Enterprises Buy Back Share Market Value Shrinkage Over 10 Billion Enterprises Wh

Can more than 20 apparel companies maintain their value with the help of the new repurchase rules? Hailan Home seems to be hoping to buy back more than 830 million shares with 900 million yuan to fight the battle for the bottom share price
.


In recent years, Hailan Home Co., Ltd. (600398.SH, hereinafter referred to as “ Hailan Home & rdquo;) with the help of “ men's wardrobe & rdquo; quickly seized market share, and ushered in Tencent shares, now with a market value of 38.6 billion yuan, it has become the highest market value of men's clothing industry in China.



However, from the stock price point of view, on May 31, 2018, Hailan Home pushed the company's share price to its highest point with 14.27 yuan and began to decline along the way. With the closing price of 8.48 yuan as of December 28, 2018, the share price of Hailan Home Stock has fallen by more than 40% in the past half year, and its market value has shrunk by about 25.9 billion yuan. In December 2018, Hailan House issued the announcement of share repurchase one after another. However, in addition to Hailan House, since 2018, more than 20 apparel companies have announced share repurchase plans. Can this move boost investor confidence in the company and undermine its share price? What is the collective decline in the market value of the apparel industry?



Achievement growth fatigue market value has shrunk by nearly 60%



From January to September 2018, Hailan House led other enterprises in the apparel industry with revenue of 13 billion yuan and net profit of 2.6 billion yuan. But Investors found that after the company achieved 72.56% and 75.83% net revenue growth in 2014, its performance began to decline sharply. From January to September 2018, Hailan House's revenue growth rate was only 4.53%. In addition, in the past six months, the market value of many apparel enterprises has shrunk to varying degrees, among which Hailan House and Senma Apparel have become apparel enterprises whose market value has shrunk by more than 10 billion yuan.



As far as the market value of Hailan Home is concerned, it is affected by the overall market environment. Since this year, the Shanghai Stock Exchange Index has fallen by 24.26% and textile and apparel by 32.04%. Secondly, the long-term fatigue of corporate performance growth has undermined investors'confidence in its development.



The reporter combed the data and found that the decline of Hailan Home's performance growth seems to be related to the development of its main business sector and a large number of closures. At present, the company has & ldquo; Hailan Home & rdquo; (Men's wear), & ldquo; Living Rabbit & rdquo; (Women's wear), & ldquo; (Santa Kano & rdquo; (Group customization of professional wear) and other brands, including men's wear, women's wear, children's wear, accessories and household products. In the first half of 2018, & ldquo; Hailan Home & rdquo; Menswear became the company's largest brand with a revenue of more than 8 billion yuan.



The 2014 earnings report shows that the company's high growth is attributed to & ldquo; Hailan Home & rdquo; 49.58% revenue growth. From 2015 to 2017, the performance of this sector declined sharply, and 408, 241 and 505 stores were closed respectively. In the first half of 2018, the growth rate was only 5.9%. At the same time, in recent years, Hailan Home's single-store revenue growth rate has also changed from 21% in 2015 to - 9.5% and - 1% in 2016 and 2017.



More than 20 apparel enterprises are on the way of share repurchase < br />.


It is reasonable for Hailan House to repurchase its shares as the performance slows down and the share price falls. At the end of November this year, the Shanghai and Shenzhen Stock Exchange issued "Detailed Rules for the Implementation of Repurchase of Listed Companies (Draft for Opinions)", which expanded the scope of repurchase of listed companies and allowed listed companies to absorb low and sell high. At the same time, after the dramatic adjustment of the stock price in 2018, the enterprises with sufficient book capital are more motivated to use the new policy to maintain the value of the company through share repurchase and improve the stock price. As of December 26, 2018, more than 900 A-shares have issued share repurchase plans.



More than 20 companies in the apparel industry have made share repurchases. Including Hailan Home, Newspaper Bird, Taiping Bird, Senma Clothing, Pathfinder, Gelisi and other brands which are concerned by the market. Among them, Hailan House intends to buy back the company's shares for five years, and plans to use 20% to 30% of the net profit of the previous year to buy back. We compare the data of share repurchase of these six apparel enterprises.



It is not difficult to find that most of the repurchases are due to stock price fluctuations and poor performance. From January to September 2018, the performance of road explorers increased negatively, and the growth rates of revenue and net profit were - 36.48% and - 72.38%, respectively. Industry insiders believe that in 2017, the company is too optimistic about the development of the outdoor industry, formulating more radical procurement planning and sales expectations, resulting in more purchases than the actual sales demand, while its subsidiaries such as travel business are losing money, affecting the company's net profit.



Chicken Running Leader



According to the data of the National Bureau of Statistics, from November to December 2017, the business income of the owners of textile and apparel increased by only 1.9% and 1.1% year-on-year, which was the lowest in the past 18 years. From January to September 2018, clothing, footwear and cap textiles increased by 8.9% year on year, 1.6% year on year. In November 2018, clothing, footwear and cap textiles also increased by 5% year on year.5%, there are signs of recovery in textile and apparel industry. At the same time, the slowdown of garment market demand will also accelerate the survival of the fittest in the industry, which will help the leading enterprises with solid foundation and obvious scale advantages to further open the gap with their competitors.



In recent years, the emerging domestic designer brands are also emerging one after another, will present the pattern of & ldquo; Chicken Run, Leader & rdquo; market analysts say, & ldquo; from the perspective of investment, clothing belongs to high-frequency consumer goods, industry trillion market space, children's clothing and sports two subdivisions have great potential, children's clothing value quality, sports focus on function, can form a comparative. Strong brand premium, get more channel support. ”



In response to the concerns of the above investors, the researcher of Investor Daily called Xu Qinghua, the Secretary of Hailan's home, and called the company two days later. A man said to the researcher: & ldquo; we will not reply to it.