Youngor Capital Faces a New Opportunity at a Dangerous Crossroads

"Yao Yezheng" Youngor fully began to adjust its troika.

Recently, the new office of Shanghai Kaishi Investment Management Co., Ltd. was officially moved to Lujiazui's Citigroup Building, which fully “takeover” Youngor’s financial asset management business of nearly 10 billion yuan.

"The company will fade out the equity investment business and reduce the impact of capital market volatility on the valuation of listed companies, but it will not withdraw, nor will it spin off the assets of listed companies." On January 21, Youngor's securities affairs representative told reporters.

Youngor once used textile and clothing as its main business, real estate and equity investment as two wings, but according to a young person inside the Younger said in late January, in the Youngor's internal meeting, the latest caliber of Chairman Li Rucheng has been “the textile and clothing and real estate is the main Industry, equity investment is an exploratory business."

Fade out without exiting

"With 10 billion yuan in funds, with 20 people in the team, looking for projects across the country," was once one of the typical impressions of Li Rucheng.

Younger, who started with clothing, purchased 200 million shares of CITIC Securities (600030.SH) in 1999 at a cost of 320 million yuan. When the stock price of CITIC soared to above 100 yuan in 2007, the equity investment business did bring huge profits. The investment income increased by more than 50 times compared with the same period of last year, exceeding the growth of the net profit of the main industry by 220%. Afterwards, Li Rucheng successively invested in the shares of Ningbo Bank, Bank of Communications, and Jinma Stock, and established Ningbo Youngor Ventures and Shanghai Youngor Investment Company to conduct VC and PE businesses, respectively. Due to multiple investment costs and timing, the assets of the equity investment business were once over 20 billion yuan, and Li Rucheng was honored as "China's Buffett".

However, the volatility of the capital market has also caused Youngor’s equity investment business to shrink, and Youngor suffered tremendous pressure from the market. Based on the closing price of Haitong Securities at 11.7 yuan on January 21, Youngor lost more than 1.2 billion yuan in the cost of 3.588 billion yuan in 2007. The Younger Third Quarterly Report shows that the market value of the company's securities investment projects has dropped from 13.5 billion yuan in early 2008. 10.4 billion yuan, the company's net profit fell 43.55%.

Hu Dezhong, deputy chief of Shanghai Kaishi, told the reporter that as early as 2007, Li Rucheng had already begun thinking about fading out and looking for a professional team to take charge of the equity investment business. However, he had not found a suitable candidate until September 2008 when he met the original rich country fund. Vice-president Chen Jiwu and fund manager Li Wenzhong confirmed the formation of the Kaishi team and handed over the asset management tasks of the billion-dollar project to Casey.

According to the aforementioned Youngor insider told the reporter, after the establishment of Kaiser, Youngor had discussed the practice of transferring the equity investment business from listed companies to the group to reduce the impact of capital market fluctuations. One of the solutions was to gradually purchase the equity project from Kaishi. . As the Youngor Group holds 60% of the shares in Caishi, after Jieshi takes over all financial assets, the Youngor Group's revenue will not be affected, and it will also be able to avoid the stock price fluctuations of listed companies.

However, Youngor's securities affairs representative told the reporter that although the chairman has faded out, the company’s market value will be greatly affected after the equity investment business is spun off, so Youngor will not spin off the assets.

Hu Dezhong told the reporter that on December 13, 2008, Youngor signed a relatively strict asset management agreement with Kaiser, and the annual return of 10 billion assets was only over 10%. Kaiser could obtain performance rewards, or only consultancy fees.

The reporter noticed that one detail was that Li Rucheng, who had divested his direct investment, had hired Kaishi as his management consultant. His daughter also became one of the principals of Shanghai Kaishi, managing back office operations and finances.

Two carriages

In 2009, Youngor's textile and apparel and real estate business will face no small pressure.

In the apparel industry, Youngor has established an industrial chain of cotton planting, textile printing and dyeing, and garments. At the same time, a number of sales revenues ranked first. However, Wang Rong believes that Youngor’s current apparel business faces bottlenecks. “Apparel brings a net profit of 800 million to 1 billion yuan to listed companies every year, but its market share has not been improved.” She believes that Youngor is mainly focused on mid-range products and urgently needs to enhance design capabilities and increase high-end products to enhance development. space.

In early 2008, Youngor acquired the assets of the Xinma Group for US$120 million. Market participants said that its design and marketing capabilities in high-end products will benefit Youngor. Wang Rong, an analyst at United Securities, believes that it is also necessary to look at Youngor's ability to acquire mergers and acquisitions. At present, mergers and acquisitions have reduced Youngor's apparel gross margins. In the future, the company needs to shift its production capacity from Shenzhen and other places to the mainland to increase gross profit margin.

Yang Xinyu, director of Youngor's secretary, said that the company will prepare to increase market share through brand splitting. Wang Rong analyst pointed out that Youngor has not been able to benefit from the new brand in the past two years. The highlight of the current development of the apparel business is more likely to remain focused on maintaining the original competitive advantage. This will challenge Youngor's garment industry breakthrough.

In terms of real estate business, due to the high price of land acquisition in 2007, Youngor’s average floor price of new projects increased by 30% of the average price of the project, coupled with the adjustment of the national real estate market, Wang Rong believes that in the next few years, Youngor’s The main problem is how to digest high floor prices.

Capital crisis

It is worth mentioning that the equity investment assets that have entered the third-party market value management will not be deliberately reduced in the future. In addition, in January, Youngor's extraordinary shareholders’ meeting agreed that the company should issue corporate bond financing of no more than 2 billion yuan. Therefore, since January, the outside world has been questioning Younger's funding tensions.

Li Rucheng said that even with the current status of equity investment, Youngor still holds close to 10 billion in financial assets, "the hands of money, do not panic."

He explained that the 2 billion yuan of the company’s debt was only used as a liquidity reserve, mainly because Youngor’s short-term debt ratio is relatively high, and the debt structure needs to be adjusted through a 5-year medium-term bond; secondly, the current national policy More relaxed, easier to issue bonds; finally, the current situation indicates that there must be inflation after deflation, which will be a good investment opportunity.

Hu Dezhong told the reporter that, unless there are some special circumstances and mature considerations in terms of benefits, it is unlikely that Caescade will be able to reduce its holdings of financial assets managed by Youngor in the future.