The troubles of superman.
Editor’s note: This article is from the public micro-channel number “to understand the fiscal Emperor” (ID: znfinance), Author: understand the fiscal Emperor Tang Chao.
The superman Zhang Jindong was temporarily relieved from the debt quagmire.
On January 8, Suning.com’s announcement revealed that the company’s originally planned bond repurchase plan involving 2 billion yuan of funds finally confirmed a transaction of approximately 1.733 billion yuan, and the bond repurchase funds will be credited in 3 days.
Previously, Suning Appliance stated that the company had transferred all the principal and interest payable due to the “15 Suning 01” bond into a special account in full. According to reports, the bond scale is 10 billion yuan, and the current balance is 9.06 billion yuan.
However, the early redemption of the two bonds does not seem to dispel investors’ doubts about the pressure on Suning’s liquidity.
From the perspective of financial data, Suning.com’s main business has suffered huge losses for more than six consecutive years. So some people in the industry ridiculed, “In recent years, when Suning’s financial report numbers look good, the outside world knows that it is selling assets again.”
More deadly, Suning.com’s main position is gradually being eaten away by e-commerce platforms such as Ali, JD.com, and Pinduoduo. According to a report released by the E-commerce Research Center of the Net Economics, Suning Tesco’s B2C market share was 3.04% in 2019. Five years ago, the figure was 3.1%.
In the face of the crisis, the 58-year-old Zhang Jindong once again went into battle, intending to reverse the decline. It is reported that Zhang Jindong has launched Yunwangwandian and requested that “Suning will transform and upgrade to a retail service provider in the next ten years.” But at present, after the impact of the new crown epidemic, the digital transformation of China’s retail industry has already become powerful enemies. Weimeng, Youzan, even Ali, Tencent, Technology giants such as Huawei have a place.
In such a fiercely competitive business jungle, can the “veteran” Zhang Jindong and the “major general” Zhang Kangyang still be able to renew their Break a bloody path?
Hundreds of billions of debt pressure
“The 3.98% shareholding doesn’t seem to be much. Suning and Ali have a long history of cooperation. Zhang Jindong can’t talk about selling the company, but it’s not hard to say because of lack of money. “In an interview with Beijing Business Daily, a retail industry analyst said.
On December 10 last year, the change information of the National Enterprise Credit Information Publicity System showed that Zhang Jindong, Zhang Kangyang and Nanjing Runxian Enterprise Management Center (Limited Partnership) had pledged all the shares of Suning Holding Group to Taobao (China) Software Limited company. According to public information, Suning Holding Group holds 3.98% of the listed company Suning.com and is its fourth largest shareholder. In addition, Zhang Jindong has pledged 65,000 shares of Suning Real Estate Group. The pledgee is also Taobao.
The news is like a thunderstorm, causing an uproar in the capital market. The helms Zhang Jindong and Suning companies are quickly pushed to the forefront of public opinion. At the same time, the Suning debt crisis that has been circulating for a long time on the Internet has begun to surface.
Under the knowledge of Suning.com’s third quarterly report and found that as of the end of September 2020, Suning.com’s consolidated liabilities have reached 136.14 billion yuan.
Among them, the scale of interest-bearing debt exceeds 70 billion yuan, including short-term borrowings of 28.097 billion yuan, notes payables of 24.697 billion yuan, non-current liabilities due within one year of 4.616 billion yuan, long-term loans of 6.248 billion yuan, and bonds payable of 7.995 billion yuan , The vast majority are short-term debt.
Continue to dig deeper. During the equity pledge crisis, Suning.com issued a bond repurchase plan totaling 3 billion yuan to boost market confidence. However, according to the latest data, after the completion of the second bond repurchase, Suning.com’s bond balance to be repaid in 2021 is still as high as 4.054 billion yuan. According to this calculation, the total debt that Suning.com needs to repay in the short term (within one year) is at least: 280.97 + 46.16 + 40.54 = 36.767 billion yuan.
It is worth noting that as of the end of the third quarter of 2020, Suning Tesco’s book liquidity was only 30.837 billion yuan. This means that Zhang Jindong still lacks 5.93 billion yuan if he wants to clear his debts. In addition, during the same period, Suning.com’s current assets were only 107.248 billion yuan, which was also lower than the current liabilities of 109.967 billion yuan.
Return the perspective to Zhang Jindong’s huge business map. In fact, from the perspective of assets and liabilities, Suning Appliance is the true core platform of Suning.
Its 2020 mid-year report shows that as of the end of June, Suning Appliance’s total liabilities have reached 300.289 billion yuan, with an asset-liability ratio of 73.81%. But Suning Appliance’s net assets are only 106.553 billion yuan, of which restricted assets are as high as 81.102 billion yuan.
There is no doubt that the scale of Suning’s debt and the low stock price are like a huge rock, which has long been held in the hearts of investors. Therefore, for them, the sudden equity pledge news, coupled with the previously tense credit bond market, directly became the fuse that detonated their inner anxiety. Negative sentiment was transmitted to the secondary market. In the next few days, Suning.com’s stock price continued to decline, dropping to a minimum of RMB 7.33 per share, which was a new low in the past six years . At the same time, the price of its bonds continued to fall.
Zhongsheng Securities even gave Suning Tesco a Level 3 neutral risk level in a research report, and stated that due to market trading conditions, there may be certain risks, and price fluctuations are more severe than low-risk stocks.
As of the close of A shares on January 22, Suning.com’s share price is still hovering at a low level, at 7.34 yuan, with a total market value of 68.34 billion yuan.
Capital and Financial Technology
Related transactions, flash transfers, sales of high-quality assets… When magical financial skills are difficult to sustain, naked swimmers will eventually appear.
“If I do, I may make mistakes and may fall. But if I don’t do it, I will fall faster.”Seven years ago, Zhang Jindong, who smelled the atmosphere of the Internet’s revolution, decided at an internal meeting to change Suning Appliance’s name to Suning Yunshang, hoping to create a comprehensive online, offline and retail services The road to cloud business.
At that time, Zhang Jindong probably did not expect that the new retail transformation strategy he adhered to did not make Suning Tesco a cash cow company. On the contrary, in the past 7 years, Suning.com has gone further and further along the road of huge losses.
The third quarterly report shows that from July to September 2020, Suning.com achieved revenue of 62.438 billion yuan, a year-on-year decrease of 4.58%, but the non-net profit was deducted (only reflecting As an indicator of business performance, just look at the level of operating profit) but it lost 263 million yuan.
This means that Suning.com’s main business has not been profitable for more than six consecutive years.
But it’s worth noting that in the same period, Suning.com’s net profit attributable to the financial report (this indicator is reflected in the net profit of the business combination and is attributable to shareholders of the parent company The part of the net profit) is positive.
Understanding the Caidi once in “ invisible fall: Suning Tesco’s tens of billions of profits under the magic of financial technology” said in the article, behind this positive and negative, to a large extent owed to Zhang Jindong and Suning’s large-scale capital operation.
From 2014 to 2019, Suning.com sold its own stores, Suning Xiaodian and other subsidiaries to related parties, and liquidated Alibaba stocks to turn losses into profits. In the first three quarters of 2020, although Suning.com did not sell its assets again. But judging from the consolidated financial statements, from January to September, Suning Tesco’s operating profit lost 18.024 million yuan, while attributable net profit was 547 million yuan. From this point of view, Suning TescoAlmost relying on investment income, government subsidies and other non-operating profits, only supported the profit on the financial report.
However, while experiencing sustained losses in his main retail business, Zhang Jindong generously invested in his brothers.
Speaking of this, the time goes back to 3 years ago. At that time, after Zhang Jindong and Xu Jiayin drank a cup of wine at the banquet, their relationship quickly heated up. Boss Zhang said happily, “Chairman Jiayin and I have a keen heart, and it’s a hit, we decided to promote the all-round strategic cooperation between Suning and Evergrande, and work together to lay out the scene in the era of smart retail. Consumption.”
Facts have proved that Boss Zhang is indeed a real person. Soon after, China Evergrande issued an announcement stating that Nanjing Runheng, a wholly-owned subsidiary of Suning Appliance, would strategically invest 20 billion yuan in Evergrande Real Estate. Now, despite the failure of the reorganization of Evergrande Real Estate and Shenzhen Shenfang Real Estate, Suning has not returned the 20 billion cash. Instead, he continued to stand for Chairman Xu Jiayin and convert the money into shares.
In addition, in the retail track, Zhang Jindong has also continued to “chop hands” and strengthened by acquiring external assets The image of Suning Tesco’s retail giant. Its 2019 annual report shows that during the reporting period, the company purchased Kakogawa, Wanda Department Store, Suning Smart Terminal, Carrefour China, 6 All or part of the equity of an asset management company and Tiantian Express Logistics’ multi-city branch.
Zhang Jindong’s hesitation
Zhang Jindong: “Who is our biggest competitor?”
Ren Jun, then Suning Secretary-General: “Ourselves.”
Zhang Jindong: “From the specific situation, Suning’s biggest competitor in the future may be the Internet.”
At the beginning of 2009, Zhang Jindong, who was in an incomparable fight with Gome, encountered a strong challenge from another “East Brother” Liu Qiangdong. The price war broke out very quickly. You come and go, and consumers frequently shuttle between the two platforms. In the end, it was not until the NDRC intervened. At this time, Zhang Jindong was surprised to find that Suning Tesco has been far behind by the Internet e-commerce giant. Data show that by the end of 2012, Jingdong’s sales have soared from 21 billion to 60 billion. In the same period, Suning Tesco’s sales only increased from 5.66 billion to 15.2 billion.
Zhang Jindong decided to “all in” retail transformation. He said internally that Suning will become China’s “Walmart + Amazon” in the future.
However, in the following years, whether it was to rename the listed entities to “Suning Yunshang” or “Suning.com”, or to expand the SKU category horizontally, enter the field of general merchandise and daily necessities, and even launch a “new retail” concept The Suning store has made the outside world and investors confused. After all, in terms of financial data, Suning’s main retail business is still at a serious loss, and even its share of the B2C market is showing a downward trend.
But Zhang Jindong believes that retail is a marathon without end. Therefore, in July last year, he announced that in the next ten years, Suning will be upgraded from a retailer to a retail service provider, that is, to become a Cloud technologies and platforms are open to partners. According to public information, the legal representative of Yunwangwandian is still Zhang Jindong. The company completed a 6 billion yuan A round of financing in just 19 days after its establishment, with a valuation of 25 billion yuan. It is expected to be listed on the Science and Technology Innovation Board in the future.
This also means that in the next ten years, Suning’s To C and To B businesses will go hand in hand.
But the financial report shows that from January to September 2020, Suning’s 3C home life specialty stores closed 241, Carrefour supermarkets closed 11, Redbaby’s maternal and child specialty stores closed 38, and Suning Tesco’s direct stores 674 stores were closed. In sharp contrast, at the same time, Suning Tesco retail cloud franchise stores have opened 2,432 new stores. In this regard, the financial report explained that this is to promote store strategies for different market levels and optimize store structure.
Zhang Jindong said in an interview with the media more directly, “You must learn to do subtraction. As long as you are not on the retail track, away from the products and users, you must boldly adjust , The cut that should be cut, the turn that should be turned.”
However, under drastic reforms, can Suning, which has been fighting for 30 years, finally regain the original heart? Can the Suning system break away from the existing debt and profit dilemma?
All doubts may still be tested by time and the market.
Reference material:
1| Beijing Commercial Daily, “Suning is addicted to selling assets”
2 | Tencent News Prism Deep Web, “Selling assets and maturing bonds, Suning’s hard days are coming? 》
3 | 21st Century Business Herald, Fang Haiping, “The debt ratio has soared for three consecutive years. How much pressure has Suning endured? 》
Note: The data comes from public disclosure. This article only represents the author’s views and does not constitute any investment advice.