It is doubtful that the listing of Hailan Family is indebted to debt and dividends

On May 11th, the initial application of Haicang Home Apparel Co., Ltd. (hereinafter referred to as “Hailing Home”) was not approved by the CSRC's issuer. Reasons The CSRC does not give a reply. Companies that were originally dominated by men’s branded business were seen as the most promising part of the textile and apparel sector, but Haicang’s home was not able to catch this wave of “quotations.”

In fact, from the previous prospectus submitted by Haicang House, some of the obvious problems that can be seen without the relevant professional knowledge are already visible on the paper—high profit margins and large profits built on the “fund-raising” model. Dividends on the scale, high debt ratios for successive years...

Hailan home industry chain model unique

Hailan House's prospectus shows that the IPO originally planned to issue 49 million shares, and the total share capital after the issuance has increased from 440 million shares to 48.90 million shares. According to the original financing plan, the company plans to raise approximately RMB 1.063 billion and invest in four fund-raising projects.

Among them, the total investment in the marketing network construction project is 657.325 million yuan, and the flow warehouse distribution center will invest 3.2277.77 million yuan. The total investment of the construction projects of the CFD Apparel Research Center is 49.993 million yuan, and the total investment of the entire process information management system construction project is 33.252 million yuan.

Unlike most clothing companies, Haicang Home has its own set of industry chain operations. The first is "upstream", "the company only keeps a small amount of production business, mainly through the purchase of goods with contractual merchandise returnable terms and purchase contracts with suppliers." In short, for suppliers of their own brand "OEM", When the goods are put into the warehouse, only a small amount of money is paid first, and other parts will be settled monthly with the supplier depending on the sales of the goods.

The second is the “downstream”. The franchisees of Haishu Home have stores but do not participate in the operation. The profit model is divided into certain percentages under the guidance of the sales price of the home of Hailan. However, in order to be such a "delivery shopkeeper," franchisees must also bear shop rent, labor and other operating expenses, in addition to a special deposit. Haicang House promises that the funds will be returned to the franchisee without interest after the expiration of the contract, but this deposit will be credited to the company's "long-term payables."

Liabilities and dividends are skeptical

The company needs to fully pay the suppliers to pay the money, according to sales; access to the franchise fee, while reducing the franchisee's work, but also to achieve semi-"self-operation." Sea Point Home is quite an "innovative" business model. It was originally one of the bright spots on the prospectus. However, the premise is that products must be prosperous and productive. If there is a backlog in any of these areas, there may be "bad reactions" that occur one after another. These problems have already emerged before the Haishu House sprints the IPO.

Also from the information on the prospectus, the inventory of Hailan Home was 1.305 billion yuan in 2009, 1.693 billion yuan in 2010, and surged to 3.863 billion yuan in 2011, accounting for 56.82% of assets, during the reporting period. The average annual compound growth rate reached 61.37%. The seven-wolf company listed in the reference business, which is similar to its business, had an inventory of approximately 395 million yuan in 2011, accounting for 16.23% of the total assets.

Since suppliers need to sell their goods to obtain payment from Haishu Home, under such a high inventory, suppliers will naturally increase the supply price of subsequent goods to make up for the losses caused by inventory. Haicang House itself also stated that “suppliers will transfer the pressure of cost increase to the company through price increase, which will increase the company’s procurement costs”.

The next is high dividends at high debt ratios. On the one hand, the ratio of assets to liabilities of Haishu House was 75.29%, 78.42% and 82.46% respectively from 2009 to 2011. On the other hand, in June 2010, Haishu House had a cash dividend of 277 million yuan. In August 2011, it also distributed 308 million yuan in dividends.

It is worth noting that the men's clothing business of Haifei's home is exactly what the brokers see in the eyes. Galaxy Securities believes that from a growth perspective, men's wear companies have a higher growth rate. Orient Securities said that in the early fall of the textile and apparel sector, the performance of men's listed companies eye-catching, seven wolves, nine animal husbandry king, reported that the weekly increase in hilarious birds are above 4%. In such a big environment, Haishu House's folding IPO looks even more intriguing.