The textile market, which is in a weak economic cycle, has already spent a year in the economic environment intensified inside and outside last year. Since the beginning of this year, the epidemic has been raging around the world, and the textile and clothing retail industry is currently falling into a widespread wave of store closures.
Life in the upstream, midstream and downstream sectors of the textile industry, from raw materials to production to sales, can be described as difficult. The economic environment, industrial transformation, and comprehensive social transformation are all forcing the textile industry, like other industries, to enter an era of reshuffle at the same time. Underneath the mediocre performance, there are turbulent worries in the industry.
01 The risk of bankruptcy of the largest women’s clothing group in North America has intensified
5 billion sales with a market value of less than US$20 million
Ascena Retail Group Inc, a large North American women’s clothing group, has a market value of less than US$20 million after encountering a market impact similar to the 2008 financial crisis. High leverage and huge losses are exactly the type of companies that are easily defeated by the “debt” virus. As of February 1, in the second quarter of fiscal year 2020, Ascena Retail’s long-term debt reached US$1.292 billion. The company explained that debt decreased slightly from US$1.372 billion in the previous fiscal year, mainly due to a US$49 million debt repurchase. In addition, Ascena Retail said the company has an unused revolving loan facility of US$247 million.
After the results were released, the rating agency S&P immediately downgraded Ascena Retail’s credit rating to CCC-, reflecting that the group purchased US$80 million in issue bonds at an actual price of US$49 million, implying that The North American women’s clothing giant is facing the risk of defaulting on its debt and further facing the risk of bankruptcy. However, Ascena Retail later issued a statement criticizing S&P’s ratings, claiming that the company’s business can generate strong cash flow and has US$600 million in cash and credit lines. As the group’s strategic transformation changes, it can ultimately drive long-term value.
However, the market has been worried about Ascena Retail’s debt default and bankruptcy for a long time. Coupled with the current epidemic raging around the world, the U.S. retail industry is currently involved in a widespread wave of store closures. The company is under increasing pressure. As of the close of trading last Friday, the company’s stock price still had a market value of less than US$20 million despite a surge of only 30%. Following an 86% plunge in 2019, the decline this year as of March 13 has exceeded 75%.
At the end of the year, the company conducted a 1:20 reverse stock split to avoid being delisted by Nasdaq. So far, the company’s share price of less than $2 may face a similar situation. risk. In fact, in addition to S&P, another agency, Moody’s, has also been continuously downgrading its ratings, and the company’s debtors are treading on thin ice whenever there is a sign of trouble. In January this year, it was confirmed that the company was preparing to sell its New Jersey headquarters building to reduce debt. Previously, the company sold the maurices brand and closed the dressbarn brand to reduce operating leverage pressure.
02 China’s largest full-industry apparel group</o ; MTN001" notice of interest payment funds, notifying all investors that March 16, 2020 is the interest payment date for the first phase of 2019 medium-term notes of Shandong Ruyi Technology Group Co., Ltd. (code: 101900346, abbreviation: 19 Ruyi Technology MTN001). As of the end of today, the interest payment funds paid by Shandong Ruyi Technology Group Co., Ltd. have not been received, and it is temporarily unable to act on behalf of the issuer for the interest payment of this bond.
It is reported that the issuance date of 19 Ruyi Technology MTN001 bonds is March 14, 2019, with a total issuance scale of 1 billion yuan. The term is 3 years and the coupon rate is 7.5%. Based on this coupon rate, Shandong Ruyi should pay interest of 75 million yuan on the bonds that defaulted this time.
Ruyi Technology was established in October 2001. It is a comprehensive enterprise with textile as its core, and its business involves textile, clothing, real estate and other fields.
The “epidemic” has become the biggest hot spot at the beginning of 2020. According to Tianyancha, Ruyi Technology has modified its business scope and added “medical protective masks, medical protective clothing, medical “Isolation shoes, production and sales of medical equipment” and other businesses. On the investor interaction platform, the secretary-general said that Ruyi Group’s subsidiaries are also producing protective clothing, but only to meet existing order needs, and there are currently no export plans.
In fact, even if the production of masks and protective clothing is increased, it is only a small-scale “test of the waters”. Ruyi Group’s own clothing sales business will still be affected in the short term. Limited to the impact of the epidemic.
In addition, overseas subsidiaries also frequently have problems. On March 2, RENOWN, a Japanese listed company controlled by Ruyi Technology, stated that it failed to recover 53 yuan from Ruyi Technology. 100 million yen (equivalent to about 340 million yuan) of unpaid debt, the company’s consolidated net profit in 2019 will be a loss of 6.7 billion yen, equivalent to about 430 million yuan.
In addition, the CEO of Israeli garment manufacturer Bagir also said that because Ruyi Technology has not paid the US$13.2 million in acquisition payments, it is currently considering taking legal action. Previously, one of its brands, Aquascutum, defaulted on supplies to Portugal.The company was sued for a payment of 155,000 pounds…
On March 13, the company issued an announcement stating that the company’s main business assets are excellent, production and operations have been normal, profits are stable, and With a good market image, the public market credit record of paying bond principal and interest on time has been well developed. In 2019, the company concentrated expenditure of nearly 10 billion yuan, which was mainly used to repay bank debts and repay the principal and interest of open market bonds.
The financial report for the third quarter of 2019 released by Ruyi Technology shows that as of September 30, 2019, Ruyi Technology’s assets totaled 70.164 billion, of which monetary funds amounted to 8.754 billion. However, “Profitability is stable”. Ruyi Technology, which has such a large amount of liquidity, is unable to cope with the interest expense of 75 million yuan, which makes people feel confused.
Ruyi Technology’s debt problem seems to have been there for a long time.
According to Bloomberg, in order to repay the US$345 million in US dollar bonds due to be paid by Shandong Ruyi subsidiary on December 19, 2019, Ruyi Technology has sold multiple land projects and Equity interests in subsidiaries under your name. In October last year, Jining Urban Construction Investment Co., Ltd., a state-owned local financing platform in Shandong Province, spent 3.5 billion yuan to become the second largest shareholder of Ruyi Group and provided guarantee for a bond of nearly 2 billion yuan.
In addition, in order to alleviate liquidity pressure, as of the end of September last year, Ruyi Technology had transferred its listed subsidiary Shandong Ruyi Woolen Garment Group Co., Ltd. (abbreviation: Ruyi All equity interests of the Group were pledged.
On March 11, Dagong International Credit Rating Co., Ltd. (hereinafter referred to as “Dagong International”) issued a rating report, adjusting the credit rating of Ruyi Technology to AA- and the rating outlook to Negatively, the credit ratings of “17 Ruyi Technology MTN001”, “18 Ruyi 01” and “19 Ruyi Technology MTN001” were all adjusted to AA-, and the credit rating of “15 Ruyi Debt” was maintained at AA+, while Ruyi Technology and its above-mentioned related debts were removed. Credit watch list.
As for the reasons for the adjustment, Dagong International believes that Ruyi Technology faces increased legal risks and financial risks, great short-term debt repayment pressure, limited refinancing capabilities and declining debt repayment capabilities, etc. Condition.
Following this, Dagong International announced on March 16 that it had received a “Letter on Termination of Credit Rating” from Ruyi Technology, stating that Ruyi Technology had decided to terminate cooperation with Dagong International and would not Then entrust Dagong International to continue the credit rating.
At the same time, Ruyi Technology issued a risk warning when it issued this bond: There is no guarantee for this medium-term note, and whether it can be paid in full on time depends entirely on the company’s credit. During the duration of this medium-term note, if due to uncontrollable market and environmental changes, the company may experience poor operating conditions or the issuer’s cash flow may deviate from expectations, thus affecting the full amount of this medium-term note. Cash out.
According to statistics, Ruyi Technology currently has 5 domestic bonds with a scale of 5.428 billion yuan, of which 2.903 billion yuan will mature within one year. The company also has 300 million US dollars in bonds (approximately RMB 2.1 billion) and 250 million euros in bonds (approximately RMB 1.95 billion). The total size of outstanding bonds is approximately 9.478 billion yuan.
03 Postscript
The European Union, the United States, and Japan are my country’s three traditional exports of textiles and clothing The market is also in the area where this round of new coronavirus pneumonia outbreak is concentrated. The outbreak of COVID-19 in many countries in the EU region may continue to drag down the EU’s economic recovery, leading to sluggish consumption in the textile and apparel market. Japan is also facing the same situation. Taken together, affected by the global spread of the new coronavirus epidemic, demand in my country’s main textile and apparel export markets will decline. At the same time, global textile and apparel companies will also face greater production and operation risks. This year’s off-season will be more difficult than in previous years. Textile people You need to be mentally prepared in advance! </p
