Bosideng International Holdings Co., Ltd. (hereinafter referred to as “Bosideng”) today (December 5) ) announced at noon that the company and the underwriters have entered into a subscription agreement, pursuant to which the underwriters have agreed to individually subscribe and pay for the convertible bonds to be issued by the company with a total principal amount of US$275 million.
It is understood that the issue price is 100% of the principal amount of the convertible bonds, with interest calculated at an annual interest rate of 1.00%. The maturity date is December 17, 2024, and will be issued The preliminary conversion price of the converted shares is HK$4.91 per share, which is 27.5% higher than the closing price of HK$3.85 per share on December 4;
Assuming that the preliminary conversion price is HK$4.91 per share If the convertible bonds are fully converted in Hong Kong dollars, the convertible bonds can be converted into 438 million shares, equivalent to approximately 4.05% of the company’s issued share capital as of the date of the announcement and expanded by the issuance of conversion shares as a result of the full conversion of the convertible bonds. The company’s issued share capital is approximately 3.89%.
The announcement stated that the issuance of convertible bonds can provide the company with additional funds at a lower financing cost to repay existing short-term debt, thereby optimizing the company’s financing structure and adding value to the company’s Provides funds for general corporate and business purposes.
Soochow Securities analyst Ma Li believes that the main purpose of Bosideng’s issuance of convertible bonds is to repay previous short-term borrowings while supplementing the company’s working capital. In 2018, Bosideng’s interest-bearing liabilities were 1.63 billion (both (For foreign currency borrowing), the comprehensive cost of this part is expected to be approximately 4%+. The coupon rate of the company’s convertible bonds is only 1%, and the option fees will increase the overall performance of the company.
In Ma Li’s view, Bosideng’s convertible bond issuance is expected to optimize the liability structure and release domestic liquidity. At present, most of Bosideng’s existing overseas liabilities are one-year loans, and the liability structure has been optimized after the issuance of five-year convertible bonds. At the same time, most of the previous overseas borrowings were carried out in the form of domestic guarantees and external loans, and the use of domestic working capital was limited. This issuance of convertible bonds is expected to improve the efficiency of the use of domestic funds.
The reporter checked Bosideng’s financial report and learned that in the first half of 2019, Bosideng achieved operating income of 4.436 billion yuan, a year-on-year increase of 28.81%, and operating profit of 478 million yuan, a year-on-year increase of 34.6%. Net profit attributable to parent companies was 343 million yuan, a year-on-year increase of 36.43%, and performance maintained rapid growth.
From the perspective of business segments:
1. The main business of down jackets: During the reporting period, the down jacket business achieved operating income of 2.533 billion yuan, a year-on-year increase of 4.287% %, maintaining rapid growth, accounting for 57.1% of the total operating income. Among them, the main brand Bosideng achieved operating income of 2.277 billion, a year-on-year increase of 46.2%, Xuezhongfei achieved operating income of 98 million, a year-on-year increase of 19.5%, and Bingjie achieved operating income of 106 million, a year-on-year increase of 19.5%. An increase of 17.6%.
2. The OEM processing and management business achieved operating income of 1.349 billion yuan during the reporting period, a year-on-year increase of 21.85%, accounting for 30.4% of the total revenue, and the performance maintained sustained and steady growth. The company’s OEM processing business continues to focus on serving core customers, optimizing product performance, improving processes, and improving product quality through technical advantages based on customer needs. It continues to increase the proportion of original design and manufacturing management business and enhance customer trust and stickiness. During the reporting period, the revenue from Bosideng’s OEM processing management business from the top five customers accounted for 87.8% of the OEM processing business.
3. Women’s clothing business: During the reporting period, Bosideng’s women’s clothing business achieved revenue of 506 million yuan, a year-on-year decrease of 6.10%, accounting for 11.4% of total revenue, and the scale has declined.
4. Diversified services: During the reporting period, the operating income was 49 million yuan, a year-on-year increase of 86.95%, accounting for 1.1% of the total income. Although Bosideng’s diversified business is shrinking significantly, some brand down jacket business has been transferred to the diversified business segment, resulting in its proportion being basically the same.
5. Online channels: Bosideng reached in-depth strategic cooperation with online platforms such as Tmall and Vipshop in the first half of the year to lock in high-quality resources in advance; at the same time, it paid more attention to brand public relations events and The improvement of e-commerce integration improves consumers’ online shopping experience by improving the quality of visual images and the professionalism of page details.
In the first half of this year, Bosideng ranked among the top IN brands on Tmall. The store score of its Tmall flagship store increased from 4.83 to 4.91, and customer shopping satisfaction increased from 93% to 96%. During the reporting period, Bosideng’s online channels achieved operating income of 305 million yuan, a year-on-year increase of 70.9%. Among them, the down jacket business achieved revenue of 263 million yuan, a year-on-year increase of 91.1%, achieving rapid growth. In the 2019 “Double 11”, Bosideng’s omni-channel sales exceeded 1 billion yuan, a year-on-year increase of 37%; of which, Bosideng’s Tmall flagship store sales exceeded 650 million yuan, a year-on-year increase of 58%.
From a channel perspective, while Bosideng continues to optimize its channel structure and close inefficient stores, it also attaches great importance to channel expansion in key areas. In the first half of this year, Bosideng has significantly increased the number of key stores in core business districts such as shopping malls and high-potential mainstream channels, and the construction of regional core city markets has steadily advanced.
Judging from the number of stores: As of September 30, 2019, the number of terminal stores for the company’s down jacket business was 5,161, a net increase of 533 stores compared with March 31, 2019. Among them, there are 1,922 self-operated stores, a net increase of 294 stores; and 3,872 wholesale stores, a net increase of 429 stores.
From the perspective of channel structure, 25.5% of Bosideng’s stores are located in first- and second-tier cities; 74.5% of its stores are in third-tier and below markets.
From the perspective of revenue from each channel, Bosideng’s self-operated channels achieved revenue of 454 million yuan, a year-on-year increase of 38.6%, accounting for 17.9% of down jacket revenue, achieving rapid growth, accounting for There was a slight decrease; the wholesale channel achieved revenue of 2.027 billion yuan, a year-on-year increase of 44.4%, accounting for 80%, achieving rapid growth, and the proportion increased.
Industry insiders believe that Bosideng recently held a joint press conference with the French design master Gaultier and invited celebrities such as Yang Mi and Li Yuchun to participate. The brand’s fashion has continued to improve, and it has been recognized by customers, leading to to increase the company’s revenue and gross profit margin. The company focuses on the down jacket business and has refined its internal capabilities. Starting from the operation of a single brand, through the effective output of successful management experience, it is expected to realize the development of multiple brands such as Xuezhongfei and Bingjie in the future. The growth of multiple brands will continue to provide the driving force for Bosideng’s performance growth.
Hu Yongkuang, an analyst at CMB International, believes that Bosideng’s brand upgrade is successful because the growth in performance during the reporting period was driven more by average selling prices (better than the company’s expected 15- 20% year-on-year growth) rather than driven by sales. It is now expected that the sales mix from mid-to-high-end products will reach 40% in fiscal 2020, and the company’s future goal is for mid-to-high-end product sales to account for more than 50%, so this trend is expected to continue.
The aforementioned Soochow Securities analyst Ma Li believes that Bosideng has an orderly marketing rhythm after entering the sales season, and designers from Milan Fashion Week in September The series launch conference invited supermodel Kendal Jenner to walk the show and Nicole Kidman to watch the show. At the same time, Yang Mi, the “Queen of Product Delivery”, was hired to become the spokesperson of the designer series. In October, the high-end series launch conference received a strong response. In November, she and Hermès designer Gaultier launched a joint brand in Shanghai. It has launched several down jackets, and has continuously cooperated with famous European and American actors including Tom Hiddleston, Scarlett Johansson and other big-name European and American actors to realize product exposure, and its marketing resources have increased compared with the same period last year. This year’s “Double Eleven” sales structure also reflects the high-end sales and younger customer base brought about by product and brand upgrades. It is expected that the company’s debt structure will further improve after the issuance of convertible bonds, and the increase in cash reserves will be beneficial to future business development.
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