Will the intensely expanding Fosun system suffer from indigestion?

Solid profitability, ample room for growth, three or four lines of liquor in line with the investment logic of the Fosun system. Before announcing the bid for the assets of HNA Group, Yuyuan shares have acquired Golden Emblem Wine and Shedd Wine to try to cut into the golden track of liquor and promote the transformation of real estate main business to diversification.

Will the intensely expanding Fosun system suffer from indigestion?

On one side of the layout of liquor acquisition, the other side of the expansion to the airline, intensive expansion of the Yuyuan shares of cash flow and move space is not generous, the acquisition is bound to bring challenges to its financial and operational. From the historical point of view, the entry of private capital in the liquor industry generally failed to return. Polarization, “Mao Wu Lu” as the head of the wine enterprises have been the “horse effect”, Yu Yuan shares after the acquisition of the integration of business road is still a long way to go.

On June 4, 2021, HNA Group held its first meeting of creditors. HNA liquidation group said at the meeting, HNA Group and other 321 companies have been seriously insolvent, debt service resources gap is huge, whether the introduction of a strong strategic investors in a short period of time there is uncertainty.

This makes the “Fosun system” listed Yuyuan shares bidding for the HNA Group has once again aroused concern.

As early as May 19, Yuyuan shares announced that it intends to joint related parties and strategic investors in the aviation industry, to contribute no more than 40 billion yuan, the establishment of Yuyuan aviation industry partnership (“Yuyuan industry”), to participate in the aviation entity investment. Although Yu Yuan shares did not directly disclose the subject of investment, but according to its expression of the reasons for the establishment of Yu Hang Industry, the market will lock the aviation entity in the bankruptcy restructuring process of the HNA Group.

The news directly triggered the A-share market, not only led to Yu Garden shares the next day, *ST HNA and other “HNA system” shares of several companies closed six consecutive stops, the highest weekly increase of more than 30%.

As Fosun Group’s “flagship of the happy industry”, Yuyuan shares in the recent year in the A-share market intensive strike, first 7.081 billion yuan, successively shedding wine, Jin Hui wine in the bag, and now turn to the aviation industry, it is playing a game of what “chess “What is it playing? Yu Yuan shares in the securities market sweep, will face indigestion?

Fosun system later to take the lead

Under the big wave, the early scenery of the global superbuyers, most of them are already different. HNA Group broke its capital chain, Wanda Group is also caught in the whirlpool of “deleveraging”, and now only Fosun Group continues to stir the wave of mergers and acquisitions in the A-share market.

On May 19, Yuyuan announced that it “intends to join with related parties and strategic investors in the aviation industry to contribute no more than 40 billion yuan to set up Yuyuan Airlines Industry to participate in the aviation entity investment”. The aviation entity is said to be the HNA Group.

Fosun Group had been named by the CBRC in June 2017 for “buying” overseas at the same time as HNA Group, and now the former is dramatically in the same frame with the latter as a buyer again. The relationship between the two capital families was once eye-catching.

From 2015 to the end of March 2017, HNA Group completed 28 overseas investment projects, covering four major industrial sectors: aviation, logistics, capital and technology.

In the second half of 2017, HNA Group fell into an unprecedented liquidity crisis, after which it tried to return to its main business in an attempt to save itself. By the end of June 2019, in a period of 10 months, HNA Group disposed of nearly 300 billion yuan of assets, focusing mainly on non-aviation assets and businesses such as finance and real estate. During the period, HNA Group carried out “passenger to cargo” business, which to a certain extent alleviated its liquidity difficulties.

However, affected by multiple factors such as the sudden outbreak of the new crown pneumonia epidemic in the spring of 2020, by the third quarter of that year, HNA Holdings lost RMB 15.627 billion in net profit, down 2,645.12% year-on-year. The risk of liquidity crisis was difficult to resolve, and the huge funding gap caused the already fragile trust of the government and creditors to collapse. Since then, HNA Group was forced to announce a significant asset impairment, with a huge loss of 64 billion yuan that year.

After HNA failed to save itself, on February 29, 2020, the Hainan Provincial Government took the lead in setting up the “Hainan Provincial HNA Group Joint Working Group” to fully assist and fully promote the risk disposal of HNA Group’s 2,300 companies.

At the end of January 2021, HNA Group officially announced its bankruptcy reorganization, and on February 3, 2021, the share price of *ST HNA dropped to a historical low of RMB1.2/share, which was more than 80% lower than the RMB6.86/share in June 2015. On February 19, 2021, three listed companies of HNA Group, namely *ST HNA, *ST Foundation and *ST Daji, were subject to delisting risk warning.

On April 12, 2021, *ST HNA held the first creditors’ meeting for the reorganization of the company and its subsidiaries. Since then, Air China, Jingdong Group, Ping An of China and other “rumored buyers” have been reported by the media as interested parties in bidding for HNA Group.

On April 29, 2021, Juneyao Airlines announced that “the company intends to join hands with Shanghai Juneyao Aviation Investment Co., Ltd. and strategic investors who have synergy with the company’s aviation industry to jointly establish a partnership, Jidao Aviation, and invest in aviation entities with the partnership. Aijian Group, which is part of the “Juneyao System” as well as Juneyao Airlines, also announced similar information. This means that the Juneyao Group has emerged as the first bidder of HNA Group.

On May 19, after Yuyuan announced its bid, Fosun Group was added to the bidders for the airline assets. According to some sources, the bid for HNA Group’s assets is expected to be finalized by the end of June, according to the schedule, and the draft of the restructuring will be completed.

Public information shows that Juneyao Group has assets such as Juneyao Health, Juneyao Airlines, Aijian Group, Great Eastern, Eastern Airlines, Jiuyuan Airlines, and Huarui Bank. According to a document disclosed by Juneyao Airlines in 2019, the total asset size of Juneyao Group at that time was 83.765 billion yuan and the net asset size was 27.582 billion yuan. It is reported that Gidao Airlines, the main body of this investment bid, has been formally established recently.

Fosun Group is currently one of the largest privately held enterprise groups in China, with over 40 A-share listed companies under its control or participation, and currently controls 8 A-share listed companies in practice. If it takes ownership of HNA Group, the number of A-share listed companies under Fosun’s control may increase to 11. According to the data disclosed by Wansheng, as of the end of 2020, Guo Guangchang, the head of Fosun system, directly or indirectly holds more than 5% of the shares of 41 domestic and foreign listed companies; directly or indirectly holds more than 5% of the shares of 41 financial institutions.

Obviously, the capital capability of Fosun Group is far from that of Juneyao Group. Fosun Group covers health, happiness, affluence, intelligent manufacturing and other industrial sectors, and this time the Yuyuan shares are positioned as the “flagship platform” of its happiness industry (Table 1).

Public information shows that Yuyuan’s industries include jewelry and fashion, culture and food, wine, Chinese medicine and health, cosmetics, pet health, national watches, popular clothing, business and cultural creation, oriental aesthetic life and other clusters, is a listed company with consumer as its main business.

Yuyuan shares 40 billion yuan to jointly set up a partnership, auspicious airlines and Aijian Group 30 billion yuan group, the entry of two major private capital once again made the HNA Group’s restructuring direction full of speculation.

The company’s shares were once in high spirits after the announcement of the “Fosun System” on May 20. In a sense, the later Fosun Group seems to have been placed in high hopes by the capital market.

HNA Group’s core assets

In February 2021, after the Hainan Provincial High People’s Court accepted HNA Group’s application for restructuring, the administrator started the recruitment and negotiation of strategic investors with a view to introducing new funds to support the company’s development, while HNA Group’s original shareholders’ equity would be adjusted to zero.

HNA Group’s three listed companies, *ST HNA, *ST Foundation and *ST Daji, are the core business entities of its three main businesses: aviation, infrastructure investment and construction, and commodity distribution services. The aviation sector, mainly *ST HNA, will introduce strategic investors as a whole. After the successful bankruptcy restructuring, the new strategic investors and many creditors will become the new shareholders of HNA Group, HNA Group will become a participation and shareholding platform, still retaining a certain share in its aviation and other segments of the company.

Yuyuan shares this participation in the restructuring of the HNA Group, the investment entity should be *ST HNA.

For this bid, Yuyuan shares with a large space to explain their investment logic, which emphasizes three points. One of them is to be funded by its own funds and self-financing; secondly, the depth of the happy consumption industry ecological layout; thirdly, fully grasp the opportunity of the development of Hainan free trade zone, and actively seek to invest in the breakthrough of aviation business, to further improve the industrial ecological chain, enhance the ability of industrial integration, and expand its industrial industry advantage.

Undeniably, the imagination of the commercial development between the Fosun system and the HNA system is huge. On the one hand, the existing industry of Yuyuan shares and the business of HNA Group have a large synergy effect. Fosun Group to participate in the restructuring of HNA, or the latter’s strong membership system and traffic base, and hopes to graft it with Fosun’s membership system, user resources.

Data show that at the end of 2020, Fosun Group’s total customer traffic reached 470 million, with 358 million registered members. Among them, the traffic of Yuyuan shares exceeds 100 million and the number of registered members exceeds 13 million, and the number of customers of Fosun Travel exceeds 11 million and the number of members exceeds 9 million. In contrast, the user traffic of HNA Group reached more than 100 million, which contains a large number of high-quality member resources.

In fact, because Fosun Group covers cultural travel, clothing, insurance, health management and many other products, in the era of “traffic is king”, the C-terminal traffic to do up, the HNA Group resources married into the Yuyuan shares and Fosun Group, is expected to achieve the “strong is always strong” situation.

On the other hand, “Hainan Free Trade Zone development opportunities” is considered an important factor for Fosun Group to invest in HNA.

In the announcement, Fosun Group did not mention the specific investment in the aviation entity, but stressed the opportunity of Hainan. Guo Guangchang has said that for Fosun Group, Hainan is one of the most important areas, “Fosun Group has long considered itself as a Hainan enterprise, I also consider myself as a business worker from Hainan”. The Fosun family of Fosun Pharmaceuticals, Fosun Travel, and Hainan Mining are all based in Hainan. “Fosun’s expansion plan in Hainan is not only tourism, play the company’s strengths in pension, health management, medical services and other aspects, to find more investment opportunities in Hainan.”

On the surface, one of the strategies of the Fosun system is to focus on the needs of global family users of a happy lifestyle, deep plowing health, happiness and affluence, Yuyuan shares and engaged in air passenger transport *ST HNA to complement each other’s strengths, however, for their own already rich C-terminal traffic and in Hainan has been deeply laid out Fosun system, these are clearly not Guo Guangchang’s drunkenness.

As the head of civil aviation enterprises, the core assets of HNA Group is undoubtedly its aviation license and the scale of the main business. Public information shows that by the end of 2020, HNA Group’s aviation assets have a total of 12 domestic and 2 overseas passenger licenses, 4 cargo licenses, 3 business aircraft licenses, operating 668 commercial aircraft, 132 through aircraft, the number of passenger routes over 1500; aviation main industry employees 64,000 people, including special industry personnel over 38,000, of which the core assets related to aviation Most of them are in *ST HNA. There is no doubt that its hands on a number of aviation licenses are worth a lot of money, coupled with the occupation of Hainan this piece of feng shui treasure land and other policy advantages, at this time the bottom of the HNA Group is naturally an unparalleled opportunity.

From historical data, before 2018, *ST HNA’s business situation is relatively sound, earning capacity is still available. wind data show that from 2011-2017, *ST HNA’s operating income grew from 26.271 billion yuan to 59.904 billion yuan; net profit scale grew from 2.834 billion yuan to 3.882 billion yuan; asset scale grew from 81.297 billion yuan 1973.48 billion yuan, and its ROE and net profit margin on sales remained at 7%-10%. In a sense, at this time, it belongs to the stressed assets, through asset restructuring to squeeze out the bubble, it is still expected to get out of trouble.

However, it is worth noting that the aviation industry not only has high barriers to entry, but also has “asset-heavy” characteristics. *ST HNA’s non-current assets in 2019, 2020 and the first quarter of 2021 are 146.303 billion yuan, 98.298 billion yuan and 155.573 billion yuan, accounting for 74.44%, 59.73% and 69.42% of the total assets of the year, respectively. Plus the current crux of HNA Group is the liquidity of the assets. As the new helmsman, it is bound to need sufficient liquidity or strong financing capacity to solve the problem.

So, one can not help but ask: Yu Yuan shares have sufficient financial strength or financing capacity to save the liquidity difficulties of HNA? Further, just a large layout of the liquor industry Yuyuan shares, whether there is sufficient capacity to expand the industry to the aviation industry?

Xu unfolded the blueprint of liquor investment

In fact, before the announcement of the bid for HNA assets, Yuyuan shares have twice acquired A-share companies in the recent year. 2020 May, Fosun Group’s subsidiary Yuyuan shares, with a capital of 1.836 billion yuan to take 29.99% of the Northwest famous liquor brand Jin Hui wine, Guo Guangchang became the latter’s de facto controller. Since then, Yuyuan has further increased its 8% stake in the latter with RMB 715 million by way of a tender offer. Fosun Group currently holds 38% of shares in Jin Hui Liquor.

At the end of December 2020, Fosun Group once again took a 70% stake in Shede Liquor held by Sichuan Tuopai Shede Group Co. through an equity auction, with a total investment of 4.53 billion yuan, which will take the famous southwestern liquor brand Shede into its pocket.

The company’s total assets amounted to 767.681 billion yuan by the end of 2020, and the total assets of Yuyuan reached 112.247 billion yuan during the same period, which speaks for itself in the business empire of Fosun Group.

However, the main business of Yuyuan shares in the consumer, commercial retail and real estate industries, are highly market-oriented, competitive traditional industries, especially real estate, facing a new development ecology.

Wind data show that in 2018-2020, the revenue of Yuyuan’s property development and sales segment will be 14.697 billion yuan, 19.221 billion yuan and 17.175 billion yuan, accounting for 43.51%, 44.79% and 38.99% of its operating revenue in that year, respectively.

This means that in the past few years, a very large part of Yuyuan’s revenue came from real estate development, to be precise, mainly from the contribution of its four real estate development companies in Shanghai, Beijing, Hainan and Chengdu, the main position of the real estate business in Yuyuan’s shares can be seen at a glance.

In terms of profits, the 2020 annual report data show that the Yuyuan shares of the real estate segment of the business contributed 6.915 billion yuan of gross profit, the entire company’s gross profit for the same period was 9.986 billion yuan, the contribution of real estate business up to 69.25%. In a sense, the wide range of business Yuyuan shares, in essence, is still a real estate company.

In fact, Fosun International, as a veteran developer, its happy segment business is also mostly related to real estate, including hotels, resorts and cultural tourism, the traditional real estate development business in the Fosun system occupies a considerable position.

In the “deleveraging”, “three red lines” and the recent centralized land supply “new policy”, the domestic real estate companies generally face operating pressure, Yuyuan shares are no exception. Seeking real estate business transformation, or imminent. In this regard, 2020 so far, Yu Yuan shares vigorously explore the liquor investment, naturally, it makes sense.

Liquor is seen by many as one of the most profitable industries. Even in the era of real estate frenzy, the market was once rumored that “selling houses is not as profitable as selling wine”. Leading real estate companies, Vanke A, China Evergrande, Cinnamon Park, etc., the average ROE in the past 10 years is only 16%-20%, far less than the liquor industry.

Wind data show that among the major sectors in the A-share market, the ROE of liquor-listed companies is as high as 23.43%, the ROE of liquor-listed companies is 20.71%, and the profitability of this sector ranks the top of all industries in A-share (Table 2).

The gross profit margin of 70% or more of the sales of listed companies in the liquor category is common, and such as Guizhou Maotai (600519), it is a long-term high of 90% or more. Even though the “bull” of the large consumer sector, pharmaceuticals, home appliances and food and other listed companies with high profitability, but the ROE of the liquor sector is still far more than the health care 17.14%, biotechnology 15.71%, the highest nearly 8 percentage points, profitability can be described as a ride.

In addition, liquor against economic volatility risk, there is a other consumer industries do not have the characteristics of – not afraid of inventory. Wine is not afraid to sell; stored, the older the more valuable.

With the advantages of high profitability, anti-cyclicality and strong consumption, it is not surprising that liquor assets have been snapped up by smart capital. 2020 so far, Guangdong Pearl, Guangyuyuan, Dahu shares and many other listed companies have announced cross-border liquor. In May 2020 to May 2021, the announcement of cross-border liquor Dahao Technology, the share price rose more than 6 times. As the so-called dip wine will rise, the magic of liquor also lives up to its name.

After 2015, Guizhou Maotai, Wuliangye’s operating income compound growth rate (CAGR) remained at more than 20%; Shanxi Fenjiu, Jinshiyuan, Jiujiu, Shuijingfang, etc. operating income compound growth rate is maintained at 20%-40%. 2021 first quarter data show that the operating income and net profit of Jinhui wine year-on-year growth rate of more than 48%; Shede wine industry’s operating income year-on-year The growth rate of net profit reached 8.89 times year-on-year (Table 3). In contrast, although Guizhou Maotai and other first-tier liquor performance has obvious certainty, the performance of third- and fourth-tier liquor such as Jin Hui wine and Shede wine industry has considerable room for growth and obvious elasticity, which is less costly compared with the acquisition of leading liquor companies.

In 2012, Fosun Group had contacted Hubei Shihua Liquor, Tuobai Shede, Shunxin Agriculture, but all to no avail.

At the end of 2017, Fosun became the second largest shareholder of Tsingtao Brewery, acquiring 17.99% of the H shares of Tsingtao Brewery held by Japan’s Asahi Group Holdings Co. for HK$6.617 billion, entering the liquor industry for the first time. However, as of 2021, after several reductions, Fosun Industrial has withdrawn from the ranks of the major shareholders of Tsingtao Brewery.

With Jin Hui, Shede two big name in the bag, Guo Guangchang took 8 years to finally enter the liquor industry, is also a long-cherished wish.

The solid earning capacity of the liquor track is what Guo Guangchang values, and the imaginative growth space is also in line with Fosun Group’s investment logic. For the intention of transformation of the Yu Yuan shares, the acquisition of Shede Wine, Jin Hui wine and other wine companies, cut into the new gold track, to achieve diversified transformation, is not a wise move.

In 2020, a lot of “hot money” into the A-share market, the liquor sector was pushed to a historic high moment, which not only carried the impact of the new crown pneumonia epidemic, but also from the beginning to the end of the year. After the acquisition was completed, the Fosun system shared the wave of the hot liquor market in a timely manner.

Data show that in 2016-2020, domestic liquor enterprises above the scale reduced from 1606 to less than 1400, the total annual output of liquor fell from 13.58 million kiloliters to 8.71 million kiloliters, a drop of 35.86%; during the same period, the total revenue of liquor enterprises above the scale fell only from 612.6 billion to 536.4 billion yuan, a drop of 12.44%. in 2012, the high-end liquor In 2012, the combined market share of “Mao Wu Lu” was about 71%; in 2020, this ratio increased to more than 95%. This means that the Chinese liquor industry is now moving from fragmentation to concentration, and Fosun Group’s entry into Shede Liquor and Jin Hui Liquor is the window for accelerated industry integration. It is foreseeable that the oligopoly pattern will continue in the liquor industry in the future.

In April 2021, Guo Guangchang said at the Shede 2021 national distributor conference, “the entry of Shede is not the first Fosun international layout in the wine industry, nor will it be the last. On May 27, 2021, Fosun Group’s Yunnan investment director Ma Yuntong was revealed to have visited Zhenxiong, Yunnan, the birthplace of the Chishui River, showing that Fosun continues to look for investment opportunities in the liquor industry.

In the first quarter of 2021, the sum of the operating income of the two bottles of liquor reached 1.536 billion yuan, accounting for 14.15% of Yuyuan’s current operating income of 10.858 billion yuan; the sum of net profit reached 424 million yuan, accounting for 69.5% of Yuyuan’s current net profit of 610 million yuan. In time, there is no shortage of liquor breakthroughs in real estate development, the possibility of becoming the new main business of Yuyuan shares.

Wind data show that the Shedd Wine 2021 share price rose as much as 107.75%, the Golden Emblem wine share price after the February adjustment, up more than 50%, in the A-share liquor sector is far ahead. Does this mean that Yuyuan’s “liquor story” has been recognized to some extent by the securities market?

However, the total assets of about 120 billion yuan, net assets of about 40 billion yuan Yuyuan shares, while promoting the acquisition of liquor, the other side of the expansion to the airline, under the continued strategic expansion, will not have enough heart but not enough strength?

Financial pressure and integration challenges under rapid expansion

Benefit from the hot liquor market, although the premiums of Shede Wine and Jin Hui Wine two companies for the Yuyuan shares brought considerable gains, but the financial pressure brought by the acquisition is also evident.

Financial pressure after the acquisition

Since the first half of 2020, Yuyuan shares have completed the financial consolidation of Jin Hui Wine and Shede Wine one after another. After the consolidation, its net profit in 2020 is 4.023 billion yuan. And the acquisition of two liquor actually cost Yuyuan shares 7.081 billion yuan, a sum equivalent to 176% of its annual net profit.

Wind data show that Yuyuan shares in 2019 and 2020 short-term borrowings of 4.219 billion yuan, 6.314 billion yuan, respectively; during the same period, non-current liabilities due within one year of 5.988 billion yuan, 8.317 billion yuan. It can be seen that Yu Yuan’s short-term borrowings increased by 49.65% and liquid liabilities due within one year increased by 38.89% year-on-year. After the completion of these two acquisitions, its short-term debt skyrocketed and the pressure to pay off the funds increased greatly.

Yuyuan’s gearing ratio continued to rise from 62.26% in 2018 to 66.16% in the first quarter of 2021, the highest since its listing. Under the existing capital market environment, Yuyuan’s own financing space is relatively limited. The historical dividend rates of Jin Hui Wine and Shede Wine were 31.63% and 16.86%, respectively, with reference to a rough estimate of the scale of earnings in the past three years, the annual dividends of these two liquor companies on the cash contribution of Yuyuan shares is but in 80-85 million yuan, which is difficult to meet its capital needs for further expansion.

The sum of money funds, notes receivable and accounts receivable of Yuyuan shares in 2019, 2020 and the first quarter of 2021 is 18.657 billion yuan, 17.57 billion yuan and 16.239 billion yuan, respectively. In contrast to the size of short-term debt for the same period, there is not enough room to move its cash flow. If the acquisition of HNA Group assets again, is bound to bring challenges to the cash flow of Yuyuan shares.

As a grandchild of Fosun International, Yuyuan shares are backed by the massive Fosun system, but the former’s room for maneuvering is not much.

Financial data show that in 2019, Fosun International operating income of 142.982 billion yuan, profit attributable to shareholders of the parent company 14.8 billion yuan, of which, Yuyuan shares, Fosun medicine, Fosun Portugal insurance, Fosun travel, Dinra reinsurance and other five subsidiaries contributed 81% of the income, the proportion of the contribution of the happy segment reached 47.47%.

In 2020, Fosun International had operating revenue of 136.629 billion yuan and net profit attributable to the mother of 8.018 billion yuan, of which the happy segment contributed 40.92% of the operating revenue. 2020, due to the impact of the new crown pneumonia epidemic, domestic tourism revenue was quite dismal, and the main business is resort Fosun Travel and Culture, Atlantis Hotel Hainan, Club Med and other real estate related businesses All were hit to varying degrees, and its net profit of the pleasure segment was -280 million yuan.

The pleasure segment business, especially the Yu Garden shares, is pivotal to Fosun International, which has assets of more than 760 billion yuan. Once the operating performance and financing ability of the Yu Garden shares are limited, the expansion space of Fosun International is not optimistic. What’s more, Fosun International’s gearing ratio is always much higher than that of Yuyuan shares, with a steady 74% over the last 5 years.

What’s more, outside of Yuyuan, in January 2021, Fosun Group also acquired the control of Wansheng, which is engaged in fine chemicals, through its control of Nangang. According to the announcement, Nangang Co. spent RMB 1.187 billion to acquire 14.42% of the latter’s shares from Wansheng Investment and fully subscribed to the latter’s directed issue for RMB 1.573 billion. After the completion of the transaction, Nangang will hold 120 million shares of Wansheng, accounting for 29.98% of the total share capital of the latter after the issue, becoming the new controlling shareholder of Wansheng.

Public information shows that as early as April 23, 2020, Moody’s has put the bond ratings issued by Fosun International and its subsidiaries and Fortune Star (BVI) Limited and guaranteed by Fosun International on the watch list for downgrade. Less than two months after acquiring a 30% stake in Golden Emblem, Moody’s again downgraded its rating on Fosun International to Ba3, which is negative.

Moody’s report at the time pointed out that “Fosun relies on short-term financing due to its debt investment strategy and its recurring revenue at the holding company level is insufficient to cover its operating expenses and interest costs,” indicating that market concerns about Fosun International have never stopped. The domestic epidemic is still recurring and the operating results of Fosun International’s many industries are full of unknowns.

As of the end of March 2021, Yuyuan shares assets of 120.199 billion yuan, *ST HNA assets amounted to 224.114 billion yuan, Yuyuan shares bid for the assets of HNA Group is no less than “snake swallowing an elephant”, its financial pressure is worthy of attention.

The challenge of liquor asset consolidation

As mentioned earlier, the liquor business has been profitable since ancient times and coveted by private capitalists. But historically, entrants have generally failed.

Since June 2011, Legend Holdings’ liquor companies have acquired Hunan Wuling Liquor, Hebei Qianlong Drunken Liquor’s Bancheng Yaobu Liquor, Shandong Confucius Family, Anhui Wenwang Brewery and other companies at a cost of more than 2 billion yuan, a sensation.

Since then, giants from various industries, such as HNA Group, Wahaha Group, Weiwei (600300), Xinghewan Group, and Garden City Gold (600766), have all had their hearts set on the liquor business (Table 4). Following the announcement of the acquisition of Guizhou Renhuai Yijiofang Liquor Company in 2018, the Haiyin system acquired Guizhou Gaojiao Liquor Co. and Jiangxi Zhanggong Liquor in succession in 2019. In November of the same year, Dong Mingzhu, chairman of Gree Electric, visited Jinshiyuan (603369); ST Rock (600696) announced that it had changed its company name to Shanghai Guijiu Co. and formally entered the liquor market.

The buzz in the liquor circuit never stops. New Fortune’s statistics on M&A events in the liquor industry from 2011-2021 show that 84 equity asset acquisitions in the liquor category were made, involving an amount of 37.007 billion yuan. This, the wine enterprises between (internal) mergers and acquisitions, state-owned acquisition of equity events accounted for the main; outside the industry funds into the private capital acquisition of wine enterprises accounted for a relatively small, especially the diversification of real estate enterprises transformation of liquor is not rare.

With the capital market wind shift, the current liquor industry has been polarized, into the “two strong, weak middle” pattern. In the “Mao Wu Lu” led by the medium and high-end famous wine continues to strengthen, Niulanshan, the old village long and other light bottle wine in the low-end liquor accounted for an increasingly high proportion, continue to sell, the middle end of the Jin Hui wine two ends under pressure. 2016-2020, Jin Hui wine operating income, net profit growth rate is lower than the “Mao Wu Lu In 2016-2020, the growth rate of operating revenue and net profit of Jinhui Wine is lower than that of “Mao Wu Lu” and other mid-to-high-end famous wines, and the performance is slightly weak. As a typical regional-type wine enterprises, its breakout or a long way to go.

Although the Shede brand is ranked among the “six golden flowers” of Sichuan wine and “China’s famous wine”, the brand has greater influence, but in recent years has fallen to the tail end of the camp. In Wuliangye, Luzhou Laojiao, Jiannanchun has basically completed the national layout, still belong to the regional wine enterprises, how to complete the high-end and national breakthrough, worthy of attention.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/will-the-intensely-expanding-fosun-system-suffer-from-indigestion/
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