"Three Doubts" Roasted AOKANG Shoe Industry Listed

In the context of high market leather prices, the company's leather costs can be reduced year by year, and under the condition of poor direct operation, the company plans to expand the "high yield" of straight battalion and self produced leather shoes, but the output remains unchanged for several years. There will be "three big doubts" in AOKANG footwear industry.

Lower and lower cost of leather

Since 2008, the cost of leather as the upper reaches of leather shoes has shown a strange decline year by year in the prospectus of AOKANG footwear industry.

Prospectus shows AOKANG

Reporters in Haining, Zhejiang, China's leather industry, learned that the main raw material needed by the leather industry this year rose from a square foot of 10 yuan last year to 15~16 yuan this year. Some sheepskin prices rose to around 28 yuan per square foot, and the price nearly doubled.

In the earnings report, Carson international [1.25 0.00%] (00496.HK), a listed company in Hongkong, said that the price of cowhide climbed to a historical high level at the end of 2010, and that the manufacturing revenue of Carson international furniture and leather and other manufacturing businesses was only 738 million 600 thousand yuan in the first half of this year, down 19.1% from the same period last year. This part of the business lost 14 million 200 thousand yuan, compared with a profit of 85 million 100 thousand yuan in the same period last year.

How did AOKANG shoes keep in the last 4 years or so?

Limited business capacity?

The prospectus shows that if successful listing,

But judging from past performance, AOKANG shoes industry is not strong enough to control direct stores, so that the company's revenues are increasingly relying on distributors.

The data show that the revenue contributed by the distributor to AOKANG shoe industry is on a rising trend. The proportion of distributors in the three years of the above 66.88% years is 66.88%, 65.85%, 58.33% and 36.85%, respectively. As a result, the proportion of direct channel revenue of AOKANG footwear industry is 21.44%, 20.17%, 21.75%, 28.67%.

Now that the past 4 years have proved that dealer channels are more conducive to performance support, how will AOKANG shoes industry guarantee the performance of Direct stores in the future?

Why did leather shoes remain unchanged for several years?

AOKANG shoes industry is very popular in the prospectus for its own leather shoes, and thinks that it contributes a lot to the profitability of the company.

The unit cost of self-produced products in the first three years is 82.07 yuan / 85.72, 85.72 yuan / double, 89.04 yuan / double and 92.48 yuan / double, respectively. The unit cost of self-produced products is on the decline. The main reason is that the company's production scale continues to expand, making the single cost of the company's own products decreasing.

Over the same period, the unit cost of outsourced products is 101.11 yuan / double, 93.28 yuan / double, 102.26 yuan / double and 137.52 yuan / double respectively.

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Therefore, the gross profit margin of self produced products in the first three years is 40.14%, 37.47%, 33.17% and 25.50% respectively, while the gross margin of outsourced products is 33.34%, 28.47%, 24.47% and 23.36% respectively.

But in the past 4 years, the number of AOKANG's own leather shoes has basically remained unchanged. The annual output of AOKANG shoe industry is 7 million 489 thousand and 500 pairs, 6 million 894 thousand and 800 pairs and 7 million 813 thousand and 100 pairs in 2008~2010, and has never been over 8 million pairs. The utilization rate of its own capacity is 83.47%, 83.55%, 75.77% and 84.40% in three years, and has never been saturated.