The retail business of New Hua Du Supercenter Co.Ltd(002264) is a little “hot”.
In November 2021, New Hua Du Supercenter Co.Ltd(002264) (002264. SZ) announced the planned sale of all assets (except trademarks) and liabilities of its retail business segment, and will publicly solicit interested transferees. The Fujian retail giant, which started with a supermarket, wanted to completely abandon the retail business, which triggered a lot of speculation for a while. In the past three months, New Hua Du Supercenter Co.Ltd(002264) did not find a home smoothly. Finally, it was “own person”, that is, New Hua Du Supercenter Co.Ltd(002264) controlling shareholder – New Hua Du Supercenter Co.Ltd(002264) Industrial Group Co., Ltd. (hereinafter referred to as ” New Hua Du Supercenter Co.Ltd(002264) group”).
on February 11, New Hua Du Supercenter Co.Ltd(002264) announced that it plans to sell 100% equity of 11 wholly-owned subsidiaries in the retail business sector to New Hua Du Supercenter Co.Ltd(002264) group through cash sale, including New Hua Du Supercenter Co.Ltd(002264) shopping malls in Fujian and Jiangxi and Sanming New Hua Du Supercenter Co.Ltd(002264) Logistics Distribution Co., Ltd.
The announcement shows that the price of this transaction is 394 million yuan. According to the report issued by Huacheng real estate appraisal, taking October 31, 2021 as the appraisal base date, the book value of all equity of simulated consolidated shareholders of these 11 subsidiaries reached 258 million yuan. Therefore, the value-added of the transaction was about 136 million yuan, with a value-added rate of 53%.
This transaction constitutes a major asset restructuring. After the completion of the transaction, New Hua Du Supercenter Co.Ltd(002264) will change its main business from internet marketing business and retail business to Internet marketing business.
Retail business has recorded a huge loss of 123567}
New Hua Du Supercenter Co.Ltd(002264) it is understandable to be eager to abandon the retail business.
New Hua Du Supercenter Co.Ltd(002264) was established in 1999 and listed in 2008. The main source of revenue is retail business, of which the retail business is mainly supermarket department store business. Similar to Yonghui Superstores Co.Ltd(601933) (601933. SH), New Hua Du Supercenter Co.Ltd(002264) became bigger and stronger from Fujian, and then expanded its stores to Jiangsu, Jiangxi, Shanghai and other places.
But success also retails, failure also retails. In 2012, the annual net profit of New Hua Du Supercenter Co.Ltd(002264) was 160 million yuan, reaching a high level since its listing. However, with the development of e-commerce, New Hua Du Supercenter Co.Ltd(002264) ‘s traditional retail business has become difficult. In 2013, New Hua Du Supercenter Co.Ltd(002264) suffered its first loss since its listing, with a net profit of -236 million yuan. In 2019, New Hua Du Supercenter Co.Ltd(002264) suffered a huge loss of 756 million yuan.
At the same time, New Hua Du Supercenter Co.Ltd(002264) supermarkets and shopping malls closed. At the end of 2018, New Hua Du Supercenter Co.Ltd(002264) still had 143 stores, leaving only 84 stores in 2020.
During this period New Hua Du Supercenter Co.Ltd(002264) also tried many measures to recover the decline in traditional retail.
In 2011, New Hua Du Supercenter Co.Ltd(002264) acquired the assets of some stores in East China of Korea e-buy, but before long, these stores closed down one after another. In 2014, New Hua Du Supercenter Co.Ltd(002264) established o2o strategic cooperation with Alibaba in order to promote the integration of traditional retail and e-commerce. In 2017, New Hua Du Supercenter Co.Ltd(002264) jointly established Fujian Xinhe Technology Co., Ltd. with Alibaba to expand the business of HEMA fresh food in Fujian. However, in 2018, New Hua Du Supercenter Co.Ltd(002264) transferred 40.5% of the equity of new box technology to Alibaba Zetai, a subsidiary of Alibaba, and transferred the remaining 9.5% of the equity to box horse (China) Co., Ltd. in 2019.
So New Hua Du Supercenter Co.Ltd(002264) began to “break their arms for survival”. In 2019, New Hua Du Supercenter Co.Ltd(002264) sold off the equity of loss making subsidiaries Fujian New Hua Du Supercenter Co.Ltd(002264) Haiwu society and Quanzhou Shengjun Commercial Property Management Co., Ltd. The total net loss of the 11 subsidiaries sold in this New Hua Du Supercenter Co.Ltd(002264) sale in 2019 was 170 million yuan. In 2020, they turned loss into profit, with a net profit of 97 million yuan. However, they went downhill in 2021, with a net loss of 70.65 million yuan in the first October.
The interface news reporter found that the 11 subsidiaries of were in a state of loss in the first October of 2021, and only Quanzhou New Hua Du Supercenter Co.Ltd(002264) shopping mall was still profitable. Moreover, these companies are also facing a heavy debt crisis, with a high asset liability ratio, and even five have negative net assets.
After getting rid of the burden of retail business, the total assets and operating income of New Hua Du Supercenter Co.Ltd(002264) will decline significantly. Taking October 31, 2021 as the benchmark date, the total assets of New Hua Du Supercenter Co.Ltd(002264) will shrink by about 1.7 billion yuan, a decrease of 40%, and the operating income will be cut down directly. On the other hand, New Hua Du Supercenter Co.Ltd(002264) the net profit from January to October 2021 will increase by 70.65 million yuan, and the basic earnings per share will increase by 183%
source: New Hua Du Supercenter Co.Ltd(002264) announcement
After the completion of this transaction, New Hua Du Supercenter Co.Ltd(002264) from January to October 2021, the revenue and total assets will decrease significantly, and the net profit will increase.
can the transformation of Internet marketing succeed?
While gradually stripping off the traditional retail business, New Hua Du Supercenter Co.Ltd(002264) bet on the Internet marketing business.
in 2015, New Hua Du Supercenter Co.Ltd(002264) spent 760 million yuan to purchase 100% equity of three companies including Luzhou jujiuzhihe e-commerce Co., Ltd. (hereinafter referred to as “Luzhou Zhihe”). these three companies are e-commerce companies mainly engaged in Internet marketing, mainly providing b-end customers with services such as digital marketing, e-commerce omni-channel operation, product customized sales and so on.
The interface news reporter found that the highlights of the three companies are mainly in the sales of alcohol e-commerce. Among them, jiuaizhihe (Beijing) Technology Co., Ltd. has established strategic cooperative relations with Luzhou Laojiao Co.Ltd(000568) (000568. SZ), Changyu (000869. SZ) and other liquor companies, while Luzhou Zhihe holds Luzhou Laojiao Co.Ltd(000568) e-commerce company.
Since 2016, New Hua Du Supercenter Co.Ltd(002264) has added Internet marketing business income in its financial report, accounting for a small proportion but growing rapidly. In 2020, New Hua Du Supercenter Co.Ltd(002264) ‘s Internet marketing business revenue reached 1.4 billion yuan, accounting for 28%. In the first half of 2021, the three e-commerce companies have nearly accounted for half of the New Hua Du Supercenter Co.Ltd(002264) revenue structure. In the ranking of operating revenue and profit of New Hua Du Supercenter Co.Ltd(002264) subsidiaries, Luzhou Zhihe has become the first.
New Hua Du Supercenter Co.Ltd(002264) continues to expand its Internet marketing business. In 2021, Tibet Juliang e-commerce Co., Ltd., a subsidiary of Luzhou Zhihe, signed an equity transfer agreement with Huzhou junyurongshe enterprise management consulting firm and purchased 51% equity of Beijing jiushiku Technology Co., Ltd. held by the latter.
Jiushiku’s main business is also Internet marketing.
In the middle of 2021, New Hua Du Supercenter Co.Ltd(002264) issued another announcement that plans to raise 560 million yuan in non-public offering, which is mainly used to build the company’s own brand / development product incubation and content e-commerce marketing service center. in the announcement, New Hua Du Supercenter Co.Ltd(002264) said that it would incubate its own brands / developed products in the field of FMCG such as wine and food, expand the company’s operating revenue, form new profit growth points, and carry out content e-commerce projects such as store live broadcast e-commerce operation, short video platform brand agent operation and short video store
source: New Hua Du Supercenter Co.Ltd(002264) announcement
In 2021, New Hua Du Supercenter Co.Ltd(002264) plans to raise 560 million yuan from non-public offering to expand Internet marketing business.
It is worth mentioning that before the announcement of the results of this major asset restructuring, in January 2022, New Hua Du Supercenter Co.Ltd(002264) controlling shareholder New Hua Du Supercenter Co.Ltd(002264) group transferred 10% of the shares of the company to Ni Guotao, chairman of the group, with a total transaction price of 301 million yuan. After the completion of the transfer, the proportion of New Hua Du Supercenter Co.Ltd(002264) shares held by Ni Guotao and those acting in concert increased from 2.61% to 12.61%.
