The signs of performance improvement cannot cover up some problems existing in the IPO of Jiaman Garments, such as high inventory and reliance on channels, which lead to bad debt risk.
Article/Ling Xianjing, reporter of Sina Finance TMT
Few people may know what kind of company this is when it comes to Jiaman Clothing.
However, when it comes to high-end children's clothing brands such as Water Children, Hush Puppies, Haggis, ARMANI JUNIOR, many parents will immediately respond that the original Garman Clothing is a children's clothing company.
Since the establishment of Water Baby brand children's wear in 1995, over the past two decades, Jiaman Clothing has developed into a children's wear company with two private brands, two exclusive agent brands in mainland China and dozens of international front-line children's wear brands, which has taken root in North China.
Now, Jiaman Clothing has disclosed its IPO prospectus, which has been updated recently. The updated data shows that the operating income of Jiaman Clothing in the first half of this year was 329 million yuan, and the net profit was 39.1065 million yuan; In 2017, the operating income and net profit were 548 million yuan respectively, and the net profit was 54.6176 million yuan.
The signs of performance improvement cannot cover up some problems existing in the IPO of Jiaman Garments, such as high inventory and reliance on channels, which lead to bad debt risk.
In the first half of the year, the inventory was 216 million, accounting for a significantly higher proportion of assets than that of peers
Inventory has always been one of the most troublesome problems for the clothing industry, and children's clothing is no exception.
According to the updated information on the IPO of Jiaman Garments, as of the end of June 2018, the inventory of Jiaman Garments had reached 216 million yuan, equivalent to four times the net profit of the first half of the year, accounting for 44.50% of the total assets of the current period.
Most of such high inventories are presented in the form of ready-made clothing inventory. According to the data, the book value of the clothing inventory of Jiaman is 200 million yuan, accounting for 92.6% of the total inventory. In the first half of the year, a loss of 17.2217 million yuan was accrued due to inventory.
What is the level of such high inventory in the industry?
Children's wear company listed according to A-share Annil The data in the semi annual report shows that its inventory is also up to 362 million yuan, 6.5 times the net profit of 55.3996 million yuan in the first half of the year, accounting for 32.35% of the total assets of the current period; Another company with "Balabala" children's wear brand Sima Clothing Its inventory in the first half of the year reached 264 million yuan, accounting for 19.99% of the total assets of the current period
It can be clearly found from this comparison that the proportion of inventory and total assets of Jiaman Clothing is far higher than that of children's clothing peers, so the pressure of "clearing inventory" of Jiaman Clothing is very great.
This can be seen from the top ten customers of Garman Clothing. Whether in 2016 or 2017, or in the first half of 2018, Vipshop has always been the largest customer of Garman Clothing, with sales revenue accounting for more than 10%. As we all know, Vipshop is a special website that helps many garment enterprises solve the problem of inventory.
The tide of offline store closing spread, and 105 stores of Jiaman Clothing were closed in the first half of the year
The trend of offline closing of clothing enterprises is an inevitable phenomenon under the impact of e-commerce.
According to the updated information on the IPO of Jiaman Clothing, as of the end of June 2018, the total number of Jiaman Clothing stores was 780, of which 112 were newly opened and 105 were closed. In addition, a franchise store was transferred to a direct store, which means that the overall number of new stores is 6; In 2017, 227 stores were opened and 171 stores were closed.
If we say that Garman Garments is still on the edge of the closing tide, and has not fallen into the predicament of closing stores on a large scale, then Annell is completely in the tide of closing stores. According to its semi annual report, there were 1435 stores at the beginning of the year. By the end of June, the number of stores had shrunk to 1387. There were 48 stores closed in half a year, with an average of 8 stores closed every month; In 2017, 23 stores were closed, which can be seen that the closing speed is accelerating.
There are hidden dangers in the supermarket model, involving multiple lawsuits for recovery of balance payments
Jiaman Clothing relies on the supermarket model, that is, the model of opening stores and selling goods through major department stores. According to the prospectus, in the first half of 2018, the offline revenue from direct sales and franchises of Garman Clothing totaled 205 million yuan, accounting for 62.17% of the operating revenue of 329 million yuan.
The industry usually believes that supermarkets or department stores are strong channels, so the bargaining power of Garman Clothing is weak, and it is easy to form arrears and bad debts.
According to the prospectus, as of December 31, 2017 and June 30, 2018, the book value of the company's accounts receivable was 60.118 million yuan and 50.8522 million yuan, respectively, accounting for 10.96% and 15.43% of the operating income in the same period.
More troublesome than accounts receivable is the bad debt risk of the supermarket. According to the prospectus, as of the first half of this year, 11 of the 15 litigation cases involving Jiaman Clothing were related to the arrears of the supermarket or the department store, of which the largest single amount of the mandatory payment was up to 831700 yuan.
These lawsuits expose the offline weakness of Garman Clothing, or may cause concern in the market, which may also be a hidden danger for its IPO.
(The author of this article introduces: Sina Finance TMT reporter, who deeply interprets the financial report and disassembles the pan entertainment industry chain)
