Youngor's return on financial investment shrinks to reduce Kaishi

After experiencing short-term “derailment” and creating brilliant results, Youngor hurriedly stepped on the brakes after repeatedly considering one of the troika that drove the development of the company—financial investment.

With Younger, the main business of clothing, real estate and investment have brought tempting profits. During the peak period of 2009 to 2010, the scale of financial investment business reached nearly 10 billion. The trader behind this is precisely its management consultancy, Shanghai Kaishi Investment Management Co., Ltd. (hereinafter referred to as “Calestone Investment”).

However, Youngor's parent company Youngor Group's shareholding in Chisker Investment is decreasing. Yesterday, a person related to Kaishi Investment told the reporter of the “First Financial Daily”, “The shareholding ratio of Youngor Group will be further reduced, and an announcement will be issued after the results come out.”

Youngor related sources also told reporters that the current equity adjustment is in progress.

An analyst who has long tracked the investment in Chisker said: "The shrinking return on investment may be the biggest reason Younger hopes to reduce the investment in Chessstone." The above analysts speculated.

Restricted shares of seven companies fell below the issuance price of additional shares

In the past two years, the capital market has been in a downturn, and Youngor, with its huge financial assets, has encountered “Waterloo”. At the end of last year, Youngor's financial investment business realized a net profit of 487 million yuan, a decrease of 758 million yuan from the previous year's 1.245 billion yuan, a decrease of 60.90%.

The sharp decline in net profit has forced him to invest heavily in the financial sector. Youngor reported in the third quarter of 2011 that 70% of its 1.8 billion operating profit is dependent on equity investment income.

From 2009 to 2011, Youngor's total investment amount was 3.54 billion yuan, 5.334 billion yuan and 2.95 billion yuan respectively; in the same period, Youngor's financial investment business realized net profits of approximately 1.625 billion yuan, 1.245 billion yuan, and 487 million yuan respectively. In these two years, Youngor sold almost all of the listed company's shares to make profits.

However, since 2011, there have been major fluctuations in the domestic capital market, and Youngor’s “financial investment” dark horse has also encountered difficulties.

Youngor's 2011 annual report shows that it has invested RMB 2.725 billion in participating in Guangbai, Haizheng Pharmaceutical, Haley, Xingrong, Shengyi, Jinggong, Yuntianhua, Shengnong Development, Dongfang Zirconium and Xinjiang Zhongzhong. Hefei, China Gold Gold, Huaxin Cement and Shanxi Coal International have issued private placements to 13 listed companies. As of the end of May this year, the restricted shares of the top seven companies have entered circulation, but Youngor's restricted shares held without exception fell below the additional issuance price.

According to the analysts mentioned above, Kaiser Investment helped Youngor to manage 10 billion financial assets. Regardless of whether the PE business is a private placement business, most of the investment is one-way, and in particular, the increase will only be “seeing the day to eat” and the market will be bad. At this time, the risk is great.

Which can bring stable profits or clothing

In addition to clothing and financial investment, real estate is a business segment that Youngor once prides itself on. In 2010, the real estate business created a record high of 6.85 billion revenues, contributing 47% to the company's total operating revenue, accounting for nearly half of the country's total revenue.

However, after the real estate business created a record high, it soon ushered in the "most strict regulation in history." In 2011, Youngor's real estate tourism development business realized a revenue of 3.636 billion yuan, a decrease of 46.94% over the same period of the previous year; and a net profit of 572 million yuan, a decrease of 15.86% over the same period of last year.

With the slowdown in the growth of real estate and financial investment business, Youngor has also been trapped in the scrutiny of "unfulfilled business". However, when interviewed by the media, Li Rucheng stated frankly that for the survival and development of enterprises, it is difficult to say which is the main business because of the profitable projects. Because the main business also changes with the development of the company itself over time.

The reason why the company seeks for profitable projects is that for Youngor, the main cause of clothing has entered a period of slow growth. From 2009 to 2011, Youngor's revenue from textile and apparel production was in the order of 6.905 billion yuan, 6.099 billion yuan and 6.197 billion yuan; net profit was 445 million yuan, 705 million yuan and 691 million yuan in sequence.

However, from another level, it is not difficult to find that in the three major businesses, regardless of market conditions, it is only clothing that can bring stable profits. Perhaps it is this realization that Li Rucheng has repeatedly stated that he wants to return to the main business of clothing.

Then, after “derailment”, can returning to the main business become the “life-saving straw” for enterprises in the weak cities?

A market analyst told reporters that the garment industry is a slow-moving industry. The development of the men's clothing market has been plagued by problems such as the sluggish development of the men's clothing market, high rental of shops, and homogeneity. In addition, with the intensification of international competition and the obstruction of foreign trade, it is still difficult for Youngor to return to the main business of clothing to reverse the trend in a short time.