ADI Nike Distributor, Baosheng 2017, An Undesirable Annual Reorganization Is Imminent.

According to the world clothing shoes and hat net, there are shoe kings in the most important events in the Hong Kong stock market in 2017.

Be privatized.

As the January 2018 passed, another heavy bomb was dropped in the Hong Kong Stock Market: 03813-HK, also a shoe related company, was 31.82% privatized by Baocheng industrial premium.

Accordingly,

It has become the first share of privatization since the 2018 year.

ADI Nike distributors

Who is Baosheng? Baosheng is China's largest.

One of the products retailers and agents is a professional company with over twenty years of sporting goods and leisure products. Its main business is retail sports apparel and distribution agency brand products.

Some people may not know Baosheng, but no one will not know that Nike and Adidas, Baosheng are the largest distributors of Nike and Adidas in the mainland.

The main business of Baocheng group is footwear and garment manufacturing, sportswear retail and brand agency, and real estate development and sightseeing hotel business.

Yuyuan group's main business is manufacturing and distributing sports shoes, sports casual shoes, casual wear shoes and outdoor shoes, that is, Nike, Adidas and other sports brand's foundry enterprises.

Baosheng International announced on the 21 day that Baocheng intends to privatize Baosheng, with a cancellation price of HK $2.03 per share, and a closing price of HK $31.82% per 1.54 Hong Kong dollars on the last trading day, with an offer value of HK $10 billion 908 million.

At present, Yu Yuan indirectly owns about 49.99% of Baocheng's stake, and Baosheng indirectly owns 62.41% stake from Yuyuan.

Yuyuan will sell its holdings to Baocheng in the course of privatization with cash in the amount of 6 billion 763 million yuan. It has indicated that it intends to make almost all of the proceeds from the sale and make special interest. Assuming that all the funds are allocated as dividends, it will make a special interest rate of about 4.1 yuan per share in its issued share capital of about 1 billion 648 million shares.

If the privatization is successfully completed, Baocheng will hold a 100% stake in Baosheng, and Yu Yuan will no longer hold Baosheng's stake.

2017 annual disadvantage

In 2017, for Baosheng, it is impossible to describe four words with "turning around".

Perhaps the excellent performance in 2016 made Bao Sheng feel pressured. In 2017, Baosheng's sales situation was extremely difficult, and the share price also fell below HK $2.

What's more, in May 2017, the company discovered that there were abnormal sales records, which further lowered the share price.

By comparing the data in each quarter of 2017 and 2016, we can find that although the revenue comparison of 2017 has increased to a certain extent in 2016, the net profit is declining.

In the three quarter, the main reason for the company was to match sales growth, promotional activities and provision for inventories, and depreciation, amortization costs and staff costs.

The increase in sales volume is difficult to cover and meet the increase in the cost of sales. Both the operating overflow rate and net interest rate decline show that the company has obvious pressure on gross margin.

However, Baosheng did well in the fourth quarter. At last, it fixed 18 billion 831 million yuan in the consolidated net operating income in 2017, an increase of 15.68% over the 2016 year.

It is understood that Baosheng operates "Sheng Dao" and "YY sports" retail stores. About 80% of its revenue comes from the sale of Nike and Adidas products. By the end of 2016, there were 5560 direct outlets and 3199 franchises in the mainland.

In the privatization announcement, the company is directly referring to the sporting goods industry in which it is experiencing unprecedented changes and challenges. Especially the rise of online shopping can be seen in the rapid growth of e-commerce platforms, the integration and collaboration of online and offline operators, as well as the changes in consumers' expectations of building a good shopping experience under the complementary channels of line and line, and the intensification of market competition, such as more active and frequent promotional activities among sportswear brands, and the active attempts of market participants to form new stores.

The trend of sports products industry consumption accelerated to online pformation and upgrading has also promoted the pformation of Baosheng which has more advantages online. Besides, the rise of domestic sports brands such as Anta (02020-HK) and Lining (02331-HK) is also competing for the market share of foreign brands such as Nike and Adidas.

The main source of revenue is Baosheng, which is produced by Yuyuan. Online sales do not have the advantage. The prospect of continuing to maintain traditional offline retail seems to be not optimistic.

Last November, Goldman Sachs picked Baosheng out of the Asia Pacific buying list and said it was not optimistic about its profit outlook.

Restructuring is imminent.

Baosheng had previously been split up by Yuyuan, and its earnings were also listed in Yuyuan's earnings report. If privatization is successful this time, Baosheng and Yuyuan will change from "mother and son" to "brothers". Since then, Yuyuan's business scope is focused on OEM, Baosheng is concentrating on retail business.

The pformation of Baosheng is already imminent. The company will adapt to the changing market dynamics, such as expanding the channel capacity, planning organized promotional activities, strengthening the supply of store products, and providing sports related content and services.

However, the pain and the executive risks involved in the pformation will affect the performance and share price in a short time.

Therefore, in the privatization announcement, the company suggests that the 100% best option in Baosheng will be carried out directly by Baocheng, because Baosheng must change its operation mode very flexibly and timely. Baosheng will have more favorable financing and unified internal financial management under Baocheng banner, and Baosheng will benefit from the streamlined enterprise and management structure and enhanced professional knowledge sharing.

In addition, the Board believes that the current valuation level and low liquidity of Baosheng shares show that the market is insufficient to provide adequate funding for the business and growth of Baosheng.

At today's closing price, Baosheng's market value is HK $10 billion 624 million and static PE is 16.72 times. The reason for privatization is reasonable.

However, in the case of ADI Nike still strong in the Chinese market and even in the future, the biggest dealer is privatized, and whether the deal is cost-effective for investors is different.

In addition, the privatization is carried out in the form of a contractual plan. Therefore, the scheme must be approved by 75% of the unprofitable shareholders who have voted, and the 10% opposing parties can not pass more than the full shareholders. It is not difficult to understand why the controlling shareholders are willing to pay nearly 32% of the premium.

However, we can see that the privatization of Baosheng is also affected by two other important shareholders, PHL and Merrill Lynch.

Baosheng has offered nearly 32% of the bill, which means that the price will not rise again. Do we wonder if the minority shareholders will be tempted?

Thanks to the privatization news, Baosheng rose nearly 30% today, closing at HK $1.99, which is not far away from the cancellation price of HK $2.03.

The first big game of privatization took place in the first year of the year. Is there a satisfactory ending?

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