Widening The Cash Flow Of Overseas Market After Semir's Acquisition Of KIDILIZ

Recently, Semir clothing has released a semi annual report. The report shows that in the first half of the year, Semir's apparel revenue reached 8 billion 219 million, an increase of 48.57% compared with the same period last year, while the net profit to the mother was 722 million, up only 8.2% from the same period last year, and the net profit was only 669 million, up 8.02% over the same period last year.

It is worth noting that the net cash flow of Semir clothing business has plummeted from -831.89 million to -4.18 billion, a drop of 4923.37%. The explanation for Semir costumes is "the increase in the cost of this period and the merger of French KIDILIZ group".

In order to widen the overseas market, Semir apparel purchased 844 million foreign children's clothing brand KIDILIZ in the year of the first half of the year, and the increase in the KIDILIZ after the first half of the year was also reflected in the Semir clothing semi annual report.

At the same time, in the first half of the year, Semir clothing added 955 stores at one breath, and the two together led to a surge in sales expenses. In addition, the crisis of Semir clothing and deposit and loan double high also appeared gradually. The controlling shareholders who were optimistic about the prospects for development after the acquisition of KIDILIZ were two times over 1 billion 800 million.

Children wear "big beam", accounting for over 60% of revenue.

At present, Semir clothing is a leading product of adult casual wear and children's clothing. It has the mass casual wear brand "Semir" and the mid priced children's wear brand balbala. After joining the French KIDILIZ in this period, the proportion of overseas income in total revenue rose from 5.08% at the end of 2018 to 18.31% now.

However, the income structure of KIDILIZ business is a bit strange. According to semi annual reports, most of KIDILIZ stores are overseas. As of June 30, 2019, KIDILIZ has 434 Direct stores and 43 franchised stores, and the number of outlets is more than 10 times that of the franchised stores. However, in the first half of the year, KIDILIZ contributed 695 million of its revenue and only 533 million of its outlets.

At the same time, with the introduction of Semir and Metersbonwe, Baleno and other popular leisure brands, Semir once launched a brand "balbala" and entered the children's clothing industry early. At that time, there was still a lot of blank in the children's wear market. So Barbara was popular in Asia for a while, and the market share continued for the first time in many years.

After the discovery that children's money is better than adults, Semir clothing began to shift its focus to children's clothing. In 2011, 2018 of Semir's annual clothing revenue came from casual wear, and only 26.87% came from children's clothing. By the end of 2018, children's clothing accounted for 56.14%. In the first half of 2019, children's clothing revenue accounted for 63.42%, a record high after joining KIDILIZ.

In the past year, Semir clothing has been moving constantly in the children's wear market. In March 2018, it signed an agreement with THECHILDREN 'S PLACE to set up Shanghai's "Mei Mei dress" to sell THECHILDREN' S PLACE children's clothing in 26 million. In May, it also set up Zhejiang's music dress with cash 22 million 950 thousand and Wenzhou's fine clothes. It bought and operated the brand of children's wear brand COCOTREE of the gainor clothing, and the 100% of the above mentioned Semir dress 844 million purchased the French SofizaSAS, and indirectly acquired the high-end children's clothing brand KIDILIZ in France.

However, it is worth mentioning that, according to the public information at that time, the operating income of KIDILIZ2017 was 427 million euros in the year of KIDILIZ2017, and the net profit after tax actually lost 27 million euros. The average profit rate was 1 euro =7.6216 yuan in 2017, and the net profit was about 191 million. Now it seems that the "fault" of the increase in revenue has already been transmitted to Semir clothing.

Nowadays, Adidas, Lining and other sports brands have also entered into the children's clothing industry. The acquisition of KIDILIZ has allowed Semir clothing to enter the overseas market. But after careful calculations, the indicators such as revenue and gross profit seem to have improved significantly. It seems that net profit has not made more money, but it has adverse effects on inventory and accounts receivable, while KIDILIZ has become a "back pot man".

Deposit and loan double high, cash flow "red light"

Generally speaking, the cycle of enterprise production includes four links, such as capital, inventory, production and sales, and so on. When an enterprise's inventory and accounts receivable remain high, it is inevitable that people will have doubts. After all, enterprises have to pay no real return in the cycle of production.

Earlier, we mentioned that the net cash flow of Semir clothing business activities has dropped sharply, which is already -4.8 billion. This shows that in the first half of the year, the money invested in the production of the clothing was 480 million less than that collected. In order to balance the accounts, the amount of inventory and accounts receivable will increase.

Sure enough, as of June 30th, the balance of Semir's clothing inventory reached 4 billion 200 million, compared with 2 billion 642 million at the end of last year, an increase of 58.97% over the same period last year. In addition to the omnipotent reason for "merging KIDILIZ group" this time, Semir costumes interpreted this as "sales increase and corresponding stocking increase", but cat sister felt it was impossible to say.

The peak season of clothing industry was first in the beginning of 1 and February. At the end of 2018, the Semir clothing inventory increased to 4 billion 417 million, which increased by 85.27% compared with the end of 2017. Secondly, the peak season appeared in the season change. The summer shopping was generally in 5 and June. The children's clothing was concentrated in 61 and around the same time. It was completely into the off-season after 7, 8 and September. By the end of June, Semir clothing still had so many goods at the end of June, no matter whether summer clothes or autumn and winter clothes could not find the right reasons.

In addition to the backlog, the accounts receivable of Semir clothing also reached a record high of 1 billion 547 million in the medium term of the year, compared with 889 million at the end of last year, up 74.02% over the same period last year. Semir clothing is interpreted as "increasing the authorized increase of the franchisee". Although it is important to have a good relationship with franchisees, it is more important to buy the goods and finally get the money back, otherwise the sales revenue is also a figure.

The cat and sister have compared the stock and accounts receivable of the semi annual reports of Semir clothing since its listing. The two have all gone all the way. The deposit and loan double high has always been a warning signal for financial fraud. For Semir costumes, at least the cash flow is already flashing a dangerous signal.

　 Acquisition "sequela" gradually, shareholders have reduced by over 1 billion 800 million

It took half a year's net profit to buy KIDILIZ, which not only increased profits but also increased the stock and accounts receivable, but the side effects brought by KIDILIZ were far more than that.

In the past six months after the KIDLIZ, the cost of Semir clothing has soared, with sales costs rising from 947 million to 1 billion 964 million, an increase of 107.41% over the same period last year, and management fees increased from 149 million to 374 million, an increase of 151.72% over the same period last year. However, R & D investment has also increased from 88 million 477 thousand and 500 to 180 million, up 103.43% over the previous year, and there is a common reason for these growth is the acquisition of KIDILIZ group.

Of course, the increase in sales costs and advertising expenses and other factors, in the first half of, there were 955 new stores, closing 699 stores, and by the end of 6, the total number of stores has reached 1.02.

In addition, according to semi annual reports, by the end of 6, Semir's clothing account had short-term borrowings of 220 million, compared with 22 million at the end of last year, up 9 times compared with the same period last year, Semir clothing explained, "due to the merger of KIDILIZ group's short term borrowing", but this is relative to the 1 billion 837 million money fund of the sum of the sum of money.

In addition, the acquisition of KIDILIZ also increased the liabilities of Semir clothing, such as long term deferred expenses, taxes payable and so on, and even the employees' salaries rose to 251 million directly from the 100 million in 2018.

It is worth mentioning that due to the transfer pricing problem over the past 2011-2015 years, the local tax administration is conducting tax inspections on KIDILIZ, and Semir apparel has also made 95 million 38 thousand and 700 projected liabilities for this potential tax risk.

At this point, when the positive impact of the acquisition of KIDILIZ on Semir clothing is still very weak, its negative effects have been gradually highlighted, and the major shareholders of Semir clothing also have sympathy for this.

Data from the sky eye show that Qiu Guang and Semir's apparel control shareholders, together with Qiu Jianqiang, Zhou Pingfan, Dai Chi Yue and Qiu Yan Fang, are also the actual family controllers.

Qiu Yanfang and Zhou Pingfan were husband and wife in the actual control. The former transferred 5% of the shares through the agreement in July, and cash in 1 billion 308 million. The latter also received 508 million in the first half through two centralized bidding and bulk trading.

The acquisition of KIDILIZ is a key step for Semir clothing to go out of the country. It is only from semiannual reports that the problems exposed are far too large, and I wonder how Semir will achieve its great ambition in the future.