Although financing can provide Li Ning with cash flow in the short term, the industry generally believes that this also reflects on another level that Li Ning has not made much improvement in his performance since he proposed the reform and is extremely hungry for funds. Because of this, Li Ning's share price slumped 14.7% to HK$5.3 on the day the news was announced.
The new brand logo does not seem to bring good luck to Li Ning. Due to financial pressure, Li Ning disclosed on Friday that the first financing plan since the reform will raise approximately HK$1.85 billion to 1.87 billion by public offering of convertible securities. The Hong Kong dollar is used for the development of the company, including the implementation of the overall change plan, to enrich general working capital and optimize the capital structure. As the convertible securities are heavily discounted, the investor shares of the unsubscribed securities will be diluted.
Although financing can provide Li Ning with cash flow in the short term, the industry generally believes that this also reflects on another level that Li Ning has not made much improvement in his performance since he proposed the reform and is extremely hungry for funds. Because of this, Li Ning's share price slumped 14.7% to HK$5.3 on the day the news was announced.
Li Ning’s public offering will be conducted on the basis of one convertible security for every two existing shares. The initial conversion price is HK$3.50, which is a discount of approximately 43.64% to the closing price of the previous trading day. According to statistics, Li Ning’s net assets per share for the year ended June last year was RMB 3.66.
At the same time, Li Ning major shareholder Extraordinary China and strategic investors TPG and GIC have pledged to subscribe for their convertible securities in full and in full. Among them, Extraordinary China and TPG will underwrite all non-subscribed stocks at a ratio of 60% and 40% respectively. Securities exchange. After the completion of the allotment, the total number of shares of Li Ning increased by 50% over the number of existing shares.
The announcement also shows that assuming that the financing is not subscribed by other shareholders, the extraordinary China's stake in Li Ning will increase from 25.23% to 38.44%; TPG's shareholding will increase from 5.02% to 13.83%; the other shareholders (including minority shareholders) The shares were diluted from 64.33% to 42.88%.
In response, Zheng Jiahua (Hong Kong) co-director Zheng Jiahua told the reporter of the "First Financial Daily" that Li Ning major shareholders will use this method to issue shares and underwrite the shares. If there is a large number of minority shareholders who do not participate in the rights issue, the proportion of major shareholders It is expected to increase dramatically; from the perspective of the conversion price of HK$3.5, one of the reasons for the plunge in the stock price is the sharp discount to the previous closing price and net assets. The determination of the general conversion price requires an independent assessment report, such as the reference to the net assets per share, the average trading price over a period of time; the conversion price of LI-NING Financing is much lower than the transaction price and net assets per share, indicating that the major shareholder We hope to increase the proportion of shares held at a lower price. Equity financing less than net assets in the Hong Kong market is also a relatively common phenomenon.
Another person from an investment agency that did not wish to be identified told this reporter that there were three reasons for Li Ning’s sale of large convertible securities. The first is to obtain sufficient cash through financing. In the short term, it is a shortcut to optimize the balance sheet. According to the financial data from 2010 to the first half of 2012, Li Ning's asset-liability ratio was 46%, 50%, and 49%, respectively, while ANTA's asset-liability ratio was 19%, 22%, and 27% respectively.
Secondly, at the beginning of 2012, Li Ning introduced TPG, a US private equity fund. From the response of the capital market, TPG did indeed have a quick effect on Li Ning. Investors such as TPG and GIC also brought in 750 million yuan in funds to provide financial protection for Li Ning's further changes. Through the full subscription of publicly traded convertible securities and participation in underwriting, TPG will further increase its investment in Li Ning and strengthen the in-depth cooperation between long-term strategic investors and Li Ning.
Moreover, because extraordinary China is controlled by Li Ning himself and Li Jin Brothers, and both TPG and extraordinary China have increased their shareholdings in Li Ning, Li Ning has a greater say in the company and will not be checked by investors. "From this point of view, this financing is of great significance to Li Ning himself." The above-mentioned institutional sources said, "However, this way of underwriting large shareholders is not fair to small shareholders."
At the same time, the financing also made investors more bearish on Li Ning's performance. In the first half of 2012, Li Ning net profit was only RMB 44 million, a sharp drop of 84.9% compared with the same period of last year, and revenue was RMB 3.88 billion, which was a decrease of 9.5% year-on-year.
CLSA also underestimated Li Ning in recent days, maintaining its “sell†rating and issued a report saying that Li Ning was one of the more difficult brands for retailers to sell inventory in the fourth quarter of last year.
Although financing can provide Li Ning with cash flow in the short term, the industry generally believes that this also reflects on another level that Li Ning has not made much improvement in his performance since he proposed the reform and is extremely hungry for funds. Because of this, Li Ning's share price slumped 14.7% to HK$5.3 on the day the news was announced.
Li Ning’s public offering will be conducted on the basis of one convertible security for every two existing shares. The initial conversion price is HK$3.50, which is a discount of approximately 43.64% to the closing price of the previous trading day. According to statistics, Li Ning’s net assets per share for the year ended June last year was RMB 3.66.
At the same time, Li Ning major shareholder Extraordinary China and strategic investors TPG and GIC have pledged to subscribe for their convertible securities in full and in full. Among them, Extraordinary China and TPG will underwrite all non-subscribed stocks at a ratio of 60% and 40% respectively. Securities exchange. After the completion of the allotment, the total number of shares of Li Ning increased by 50% over the number of existing shares.
The announcement also shows that assuming that the financing is not subscribed by other shareholders, the extraordinary China's stake in Li Ning will increase from 25.23% to 38.44%; TPG's shareholding will increase from 5.02% to 13.83%; the other shareholders (including minority shareholders) The shares were diluted from 64.33% to 42.88%.
In response, Zheng Jiahua (Hong Kong) co-director Zheng Jiahua told the reporter of the "First Financial Daily" that Li Ning major shareholders will use this method to issue shares and underwrite the shares. If there is a large number of minority shareholders who do not participate in the rights issue, the proportion of major shareholders It is expected to increase dramatically; from the perspective of the conversion price of HK$3.5, one of the reasons for the plunge in the stock price is the sharp discount to the previous closing price and net assets. The determination of the general conversion price requires an independent assessment report, such as the reference to the net assets per share, the average trading price over a period of time; the conversion price of LI-NING Financing is much lower than the transaction price and net assets per share, indicating that the major shareholder We hope to increase the proportion of shares held at a lower price. Equity financing less than net assets in the Hong Kong market is also a relatively common phenomenon.
Another person from an investment agency that did not wish to be identified told this reporter that there were three reasons for Li Ning’s sale of large convertible securities. The first is to obtain sufficient cash through financing. In the short term, it is a shortcut to optimize the balance sheet. According to the financial data from 2010 to the first half of 2012, Li Ning's asset-liability ratio was 46%, 50%, and 49%, respectively, while ANTA's asset-liability ratio was 19%, 22%, and 27% respectively.
Secondly, at the beginning of 2012, Li Ning introduced TPG, a US private equity fund. From the response of the capital market, TPG did indeed have a quick effect on Li Ning. Investors such as TPG and GIC also brought in 750 million yuan in funds to provide financial protection for Li Ning's further changes. Through the full subscription of publicly traded convertible securities and participation in underwriting, TPG will further increase its investment in Li Ning and strengthen the in-depth cooperation between long-term strategic investors and Li Ning.
Moreover, because extraordinary China is controlled by Li Ning himself and Li Jin Brothers, and both TPG and extraordinary China have increased their shareholdings in Li Ning, Li Ning has a greater say in the company and will not be checked by investors. "From this point of view, this financing is of great significance to Li Ning himself." The above-mentioned institutional sources said, "However, this way of underwriting large shareholders is not fair to small shareholders."
At the same time, the financing also made investors more bearish on Li Ning's performance. In the first half of 2012, Li Ning net profit was only RMB 44 million, a sharp drop of 84.9% compared with the same period of last year, and revenue was RMB 3.88 billion, which was a decrease of 9.5% year-on-year.
CLSA also underestimated Li Ning in recent days, maintaining its “sell†rating and issued a report saying that Li Ning was one of the more difficult brands for retailers to sell inventory in the fourth quarter of last year.
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