Youngor’s 484 million loss needs to sell ten million garments

Youngor started with the production of clothing, and then made great inroads into real estate. At the same time, he also flourished in investment fields such as stocks and errands.

Clothing, real estate and investment form the “troika” of this Ningbo-listed company. Due to the large span of the three fields, Youngor once shouldered the name of “not doing business” in the capital market.

While clothing has long maintained its leading position in the same industry in the country, Youngor has also tasted sweetness in the real estate and investment field. In recent years, the real estate industry has contributed an annual revenue of RMB 600 million, while investing in CITIC Securities has brought in excess. 25 times the return on investment.

"If you invest well, you can earn 30 years of money in the manufacturing industry." This was the attitude of Li Rucheng, chief executive of Younger, in investing.

However, after 2010, Youngor began to face the trouble of “troika plunged into a quagmire” - the overall slacking of the apparel industry, and the macro-control of real estate restrictions, while investment has also been repeatedly “Waterloo” due to the market downturn.

Since 2011, Youngor, who realized that "the loss of real estate market and capital market functions," had publicly shouted the slogan of "returning to the main business." However, the apparel industry's environment is not as good as before.

"It's not easy to make money from clothes."

Last year, the clothing brought a net profit of more than 800 million yuan to Youngor. Nearly 9,000 production personnel and more than 10,000 sales staff supported this “achievement”.

Youngor’s predecessor was a team company called Youth Clothing Factory. In 1981, 30-year-old Li Rucheng entered the garment factory of this "original hand-work workshop" and made a tailor.

Subsequently, Li Rucheng, who had saved his garment factory by his own efforts, became the factory manager. In 1990, Youth Garment Factory established a joint venture with a Macau company to form Younger. Four years later, Youngor began producing suits.

According to the account of Youngor's official website, the experience of a “fire suit” “laid up the quality base of Youngor suit”—a production manager, in front of the workers, gradually cuts and fills in a number of colored suits. Furnace, torch."

"Younger is the representative of the first generation of men's wear brands in China," said Ma Gang, an observer of the apparel industry. According to statistics, as of 2012, Youngor's branded shirts and suits occupy the first place in the domestic market for 18 consecutive years and 13 years, and there is a big gap between them and the second place, and they are “a unique leader in the market”.

"Don't underestimate the garment industry." In 2011, Li Rucheng once said that the gross profit of shirts is far more than that of solar energy companies engaged in new energy. Taking last year as an example, the Youngor shirt's gross margin was as high as 69.38%, and the gross profit rates of suits and casual wear were also over 60%.

Last year, clothing brought Youngor more than 800 million yuan in net profit. In the two or three years before, Youngor received a net profit of about 700 million yuan from the apparel sector each year. "Cash flow in the apparel sector is very stable," said Liu Xinyu, the young secretary of Youngor.

Supporting this "achievement" is the nearly 9,000 production staff and more than 10,000 sales staff working for Youngor. They are distributed in the upstream and downstream links of fabrics, production, logistics, and sales.

In improving the retail link of the terminal, Youngor also has considerable human and financial resources. In his annual report, he wrote that 303 new outlets were added last year, and the decoration department set up 654 stores.

“Some outlets are buying properties, but some are leasing, but the overall location is more appropriate.” Liu Xinyu said that the image of outlets such as self-owned stores is related to the upgrading of Youngor's brand, logistics distribution and management.

“It's not easy to make money by doing trousers and clothes.” A Zhejiang owner once commented on Youngor and Li Rucheng in the media, and he understood Li Rucheng’s “want to make quick money”.

The “quick money” mentioned here mainly refers to the two fields that Li Rucheng entered with Younger—real estate and financial investment that have nothing to do with clothing. In these two fields of great masters, Youngor has stirred up a "reigning blood." It is the "king of the land" and also the "king of shares."

Real estate profits are several times that of clothing. In 2009, the property market was booming, and the profit generated by the three or four hundred real estate team of Youngor was about 2.5 times the profit of the garment sector supported by tens of thousands of workers.

“Every company is evolving. There is nothing wrong with investing real estate in the clothes we earn.” This is the logic of what Li Rucheng once considered “garment factories build houses.”

Public information shows that Youngor's march into real estate dates back to 1992. At that time, Youngor had not yet started producing suits. It has been reported that Youngor's development of real estate is because "the era in which welfare housing is dominant" predicts the "great prospects for the commercial housing market."

Around 2000, with the help of “Good relations with the local government”, Youngor developed a high-end community such as Haiyi Garden and Donghai Garden in Ningbo. Among them, the seascape garden it developed is also known as “Ninbo landmark building” and “top luxury home”.

According to statistics, Youngor Real Estate's market share in Ningbo's downtown area has reached about 20%. Such a high share is enough to make it a recognized “big boss” in the real estate sector in Ningbo.

In 2007, Li Rucheng shouted the slogan of “Looking for 10 Billion Yuan to Find a Place”. This year, the real estate market was booming in supply and sales, and house prices soared. The enthusiasm for capital investment in real estate has increased, and investment in real estate development completed in the country has increased by more than 30% year-on-year.

At the same time, the real economic crisis has loomed. The funds withdrawn from the entity, especially the funds in Jiangsu and Zhejiang, have gone around to search for speculative opportunities. It is against this background that Youngor is sending real estate. At the same time, in 2007, when the stock market went straight to 6,000 points, with the success of equity investment, Youngor began the "madness sweeping away" journey of Hangzhou, Ningbo and Shanghai.

In early 2007, after 76 rounds of bids, Youngor sold 1.5 billion yuan to Ningbo Huachen No. 9 plot, equivalent to 7 million yuan per mu. The floor price of 6490 yuan/square meter was also shocked by the media as "high price." At that time, the sales price of nearby real estate was around 6,000 yuan/square meter.

In July 2007, Youngor first took 90 rounds of bids, photographed a plot of Hangzhou Business School for 1.476 billion yuan, and won the "Hangzhou Land King." Two months later, it bid 2.13 billion yuan to obtain three lands in Zhuantang.

In 2010, Youngor also produced two land kings in Shanghai and Hangzhou. After spending RMB 3.3 billion to win Shanghai Changfeng Land in September, Youngor later won two lands in Hangzhou Shenhua at a total price of RMB 2.4 billion.

In a rough calculation, in less than five years, Youngor took only one item, spending nearly 20 billion yuan.

Big investment in real estate has given Younger a “good time”. In 2009, where the property market was booming, Youngor Real Estate achieved a revenue of 5.196 billion yuan and net profit of 1.191 billion yuan. In the garment sector with a revenue of 6.905 billion yuan, the net profit was only 445 million yuan.

It is Younger’s tens of thousands of garment employees who have created net profit of 445 million yuan for textile and clothing. The Youngor Real Estate team has only three or four hundred people.

The investment team contributes 50% of net profit to real estate rather than clothing, and faster than real estate to make money is a financial investment that meets good market conditions. Li Rucheng once stated that “investing all at once can earn 30 years of manufacturing money”.

On the capital market, Youngor once enjoyed the titles of "king stockholders" and "king king". The annual report shows that as of the end of last year, Youngor held shares in 21 listed companies such as Guangbai Group, Hisun Pharmaceutical, and CITIC Securities, among which the shares held by Gongda University, Guangbo and Jin Zhengda were all over 10%.

From the operation of the capital market, Youngor once benefited a lot. Among them, the success of the investment in CITIC Securities, for the moment investors and sighs as "myth."

In 1999, Youngor invested 320 million yuan and became one of the main sponsors of CITIC Securities. Later, when it was listed on CITIC Securities, its stock price soared from the issue price of RMB 4.5, reaching a maximum of RMB 115.

From 2006, Youngor began to reduce the number of CITIC Securities. According to statistics, Youngor’s shareholding in CITIC Securities has totaled RMB 6 billion.

According to reports, the success of investing in CITIC Securities has made Li Rucheng, who has always been steadfast, "happy." Li told the head of a consulting agency that he was making clothes. "The profits are accumulated little by little." "But the investment will be able to earn 30 years of manufacturing money."

Taking 2007 in the stock market as an example, Youngor obtained investment income of RMB 2.754 billion through the reduction of stocks such as CITIC Securities. By 2008, the net profit of investment has accounted for more than 50% of the total profit of listed companies.

The realization of such a huge amount of income is the investment team of twenty or thirty people. At this time, the investment has been regarded by Youngor as an investment in the business of “the least number of teams but the most profitable”, while the garment section of tens of thousands of workers “makes the least money”.

In 2008, Youngor teamed up with Chen Jiwu, a manager of the company, and established Kaishi Investment. Youngor’s investment business was entrusted by the 30-plus agency. Kaiser Investment will invest in the direction of targeted private placement and PE (private equity investment).

Afterwards, Youngor, with the help of Kaishi Investment, had no time in the limelight in the field of fixed increase. From 2009 to 2011, Youngor participated in the issuance of more than 20 listed companies such as Suning Appliance, Dongfang Electric and Huaru Hengsheng, and invested in a number of PE projects.

To this end, Youngor spent more than 10 billion yuan of funds. The resulting return is that in 2010, Youngor's financial investment business realized a net profit of 1.245 billion yuan, accounting for 46% of the total net profit of listed companies, far exceeding the apparel and real estate business. Here, "China Buffett" and other rings were crowned by Li Rucheng.

Last year, the investment sector suffered a loss of 231 million. There was a saying. Looking at Youngor's annual report, first of all, it was considered an investment company. Second, it thought it was a real estate developer. It was finally discovered that it was clothing.

Younger is often cited as a typical example of “not doing business” by domestic companies. In 2011, Li Rucheng responded to the statement that “it is not a good job”, as long as it is suitable for business, it can be done. “I love the three fields of clothing, real estate and investment. They all insist on doing it.”

According to him, Youngor is using carts to borrow arrows, through the profitability of real estate and capital markets, to nurture clothing. Li Rucheng once said that if he does not do real estate and investment, Youngor cannot have 20 billion yuan in net assets.

To catch up with the good situation, it is indeed an ideal model for the “troika” to go hand in hand and pull each other together. However, in some years, such as in 2011, the real estate and investment in the two carriages were "quilted."

Since 2011, the "most strict" history of real estate regulation and control policy has been implemented. Suzhou, Hangzhou, Shanghai and Ningbo, all of which are arranged by Youngor Real Estate, have all issued purchase restriction policies.

The resulting shock is evident from Youngor's financial data. In 2011, Youngor's real estate business achieved revenue of 3.636 billion yuan, a big drop of 46.94% year-on-year, and a 15.96% drop in net profit.

A year later, although real estate business revenue and net profit rebounded by 40% and 70%, the annual report shows that the inventory of Youngor's real estate sector is close to 22 billion yuan, accounting for 70% of the 30.9 billion current assets; at the same time, 15 properties The development cost of the project is approximately 30.46 billion yuan.

The outside world has frequently questioned Youngor’s potential tension in the capital chain. At the end of last year, news of the sale of real estate owned by Youngor fell. SouFun data shows that at present, the sale price of the Xihu QingShui project is 22,000 yuan/square meter, which is nearly 30% lower than that of 30,000 yuan/square meter in August 2011. On the recent June 20th, Youngor lost the Shenhua plot at the cost of RMB 480 million.

Real estate sluggish, financial investment also began to emerge. In August last year, news of Younger's desire to split up with Casey Investments began to see the media. In the downturn of the stock market, Youngor’s investment business suffered “Waterloo”. It is reported that in the first 10 months of 2011, Youngor participated in the private placement of more than a dozen listed companies, of which 8 were floating losses. During this period, many stocks held by the company were also stuck.

The data in the annual report more intuitively shows that the investment business is becoming more and more difficult. In 2011, Youngor's investment in the investment sector was 487 million yuan, a drop of 60.9% from 2010. In 2012, the investment sector performance further deteriorated to a loss of 231 million yuan.

"Trying to warmer than others' winter"

With the arrival of real estate regulation and the downturn in the stock market, Younger has repeatedly proposed to return to the main garment industry in the past two years. “Yorgor's strength is still clothing.”

“Under the present circumstances, the difficulty of producing garments is increasing.” According to Ma Gang, an observer of the clothing industry, the current environment of the garment industry is much worse than before. “The competition for men's clothing brands is very fierce.”

A clothing analyst for a brokerage firm said that the continuing downturn in the apparel industry is an indisputable fact. “No one company dares to say that their days are better.”

“Now the economic environment is not very good, clothing consumption is relatively low.” Liu Xinyu, the young secretary of the Young Secrets, said that the clothing industry as a whole is in the winter, Youngor has to do is use its “accumulated years of marketing network and brand image”, “to strive for The winter of others is warmer."

At the same time, the annual report shows that as of the end of last year, Youngor's clothing inventory was 1.52 billion yuan. Liu Xinyu said that compared to more than 4 billion sales, 1.52 billion yuan of inventory is a normal range, "and some of the clothing is used for display and decoration in the store, not the clothes can not be sold."

And in recent years Youngor has nurtured several young brands, Ma Gang believes that the idea of ​​this market segment is worth trying, helping Youngor to attract consumers under the age of 35, “but a brand new brand, from the It may take a long time until it is well known and accepted by the market."

As for the reliance on the real estate sector, it still looks like "unrequited addiction." Even if the land value of 480 million yuan was recently "fated", real estate will still be one of Youngor's main businesses.

According to Liu Xinyu's statement, the real estate inventory of 22 billion yuan, "can not just look at the data, but also depends on the scale of development and sales." Liu Xinyu said that currently Younger’s real estate business is selling well and there is no such thing as price cuts.

"Youngor does not have the problem of tight funding chain." Liu Xinyu said that the sales repayment is enough to support the subsequent development of real estate projects. "The garment sector can also provide stable liquidity." Liu said that Youngor will also properly implement land reserves.

â– Extended "Investment entities are not as much as deposits"

Five years ago, one of Li Rucheng’s words appeared in the media. “To make any investment, we must grasp according to the direction of China’s economic development.” At that time, Youngor, under the command of Li Rucheng, was busy getting land and stocks.

In 2007 and the next two or three years, the year when China's real estate was booming - the supply and sales of real estate boomed, housing prices skyrocketed, and surging room rushed. Contrary to the fierce real estate, the real economy is experiencing the winter brought by the financial crisis.

Data shows that the profit rate of the real economy has dropped below 5%, while real estate can easily reach over 30%. "Opening a thousand factory, less than his wife real estate," is a true portrayal of this comparison.

Many capitals have fled the real economy and have flooded into the property market. In 2009, on the list of top 100 private enterprises in Zhejiang, more than 60 non-real estate companies were involved in real estate. Youngor, Aokang Footwear, Oaks for electrical production, and Peicheng for the apparel industry are all in this list.

Once the big bull's stock market is also part of the gold rush to the land, stocks have long been a listed company's "wave." The data shows that since 2007, the number of listed companies in stocks has been more than 500. It is not uncommon for "specialized stockholders" to hold more than a dozen shares like Youngor.

"Industrial real estate stocks are not conducive to the development of the real economy." Last year, the Ministry of Industry officials said that in order to attract capital to stay in the real economy, will be introduced to reduce burdens for SMEs, subsidies and other measures.

According to Zhou Dewen, president of the Wenzhou Small and Medium-sized Enterprise Development Promotion Association, Wenzhou’s private capital interest in the real economy is still small. Zhou Dewen said that with the real estate regulation and the stock market's declining in recent years, some capital has escaped from these originally hot areas.

"Real estate and the stock market can not vote, everyone is also very cautious about private lending." Zhou Dewen said that these fleeing funds can not find a better channel, but did not flow to the real economy, the ultimate return is the bank. For this reason, Zhou Dewen categorized himself as "having no confidence in the real economy." According to him, at present, the profit rate of the real economy in Wenzhou is below 3%, and "investment entities are not as good as deposits."