On May 27, Shanshan Brand announced that it would sell Ningbo Lekake Clothing (hereinafter referred to as “Ningbo Lekake”) to its wholly-owned subsidiary Ningbo Shanshan Fashion Clothing Brand Management Co., Ltd. on June 22. A special general meeting of shareholders was held regarding the matter of 20% equity interest in “Kake”.
On April 29, Shanshan Brand disclosed matters related to the sale, and the transferee was Ningbo Shanshan Rongguang Clothing Co., Ltd. (hereinafter referred to as “Shanshan Rongguang”) has a price of 50 million yuan and an expected net income of approximately 13.7756 million yuan.
Shanshan Brand stated in the announcement that Ningbo Lekake’s equity is 20% owned by Shanshan Brand, Shanshan Rongguang and other independent third parties respectively. , 30% and 50%. If the sale is completed, Shanshan Brand will no longer hold any interest in Ningbo Lekake.
The Ningbo Lecoq sold this time was established in 2004. It is the Chinese agent of the “French Rooster” Lecoco brand and is mainly engaged in the retail, trade and distribution of sporting goods. .
As the transferor, Shanshan Brand is mainly engaged in the design, promotion and sales of men’s business formal wear and business casual wear. It includes three brands: FIRS, SHANSHAN and LUBIAM.
Initially, Shanshan brand was founded by Zheng Yonggang in 1989. In 1991, Shanshan brand was changed from state-owned to collective. It was also changed to a joint-stock system. In 1996, Shanshan Co., Ltd. became the first listed company in China’s apparel industry.
In 1999, due to fierce market competition, Shanshan Co., Ltd. devoted itself to the field of lithium electronic battery materials and turned into a new energy industry enterprise. The clothing business became one of its three major business sectors.
In May 2017, Shanshan Co., Ltd. spun off its apparel business and submitted a listing application in Hong Kong under the name “Shanshan Brand”. In June 2018, the Shanshan brand, whose main business is clothing, was listed in Hong Kong.
In fact, in recent years, the development of Shanshan brand has not been smooth. From 2015 to 2019, Shanshan brand revenue increased steadily, from 527 million yuan in 2015 to 1.042 billion yuan in 2019.
The net profit of Shanshan brand is on the decline, from 52.8298 million yuan in 2015 to 36.2104 million yuan in 2018. In 2019, it fell 145.05% year-on-year, with a loss of 16.3122 million yuan. Yuan.
The annual report shows that in 2019, Shanshan Brand’s net profit turned into a net loss mainly due to the decline in sales gross profit margin, the increase in sales and distribution expenses, accounts receivable and other receivables. Impairment provisions increased, which was partially offset by listing expenses that were not recognized during the year.
Economist Song Qinghui said that the Shanshan brand has already started to suffer losses in 2019, and the sale of Ningbo Lecaco shares may be a way to withdraw some funds.
Regarding the reasons for the sale, Shanshan Brand stated in the announcement that part of the net proceeds collected from the sale will be used for working capital needs, which is expected to enable Shanshan Brand to invest in more Multiple resources focus on the development of managed brands to enhance their long-term value.
In addition, Shanshan Brand can use part of the net proceeds from the sale to repay part of its bank borrowings, reduce its overall interest costs and improve its financial position. The net proceeds from the sale, after deducting related expenses, are estimated to be approximately NT$49.2014 million.
Shanshan Brand stated in the announcement that it plans to use 40% of the net proceeds from the sale as working capital, and 60% of the net proceeds from the sale to return existing Bank loan.
Song Qinghui analyzed that if the sale of Lecaq’s equity passes the shareholders’ meeting, part of the funds will be recovered for the Shanshan brand; if it fails to pass the shareholders’ meeting, the sale will not be successful. , may not be able to solve the Shanshan brand’s predicament and bring a blow to Shanshan brand’s capital flow. </p
