Why didn't Benny Road show up in the capital market?

Today, Benny Road has become a casual wear brand known throughout Asia, including mainland China, Hong Kong, Taiwan Province and Singapore and the Middle East. The company operates 5,000 chain stores worldwide, of which more than 2,000 in China. The company is now one of the largest and fastest growing companies in the casual wear market. How can a company with such a good development trend not emerge in the capital market?

On the other hand, Giordano and U-Way, two other Hong Kong casual wear companies with a momentum less than Baleno, have long demonstrated their strength in the Hong Kong stock market. Can an international company going globally rely on the strength of the capital market to continue expanding? Does Baleno have any intention in this area?

Benny Road still cannot stand alone

It has been 10 years since Hong Kong listed company Tak Yong Jia Group became the largest shareholder of Bally Road Company. From its annual report announced in March this year, we can see that as of March 31, 2006, Hong Kong has acquired the position of Yongjia Group. The total turnover increased by 6% to HK$7,749 million. The net profit attributable to equity holders of the company was HK$480 million, an increase of 4% over the previous year.

The Group further observed the main sources of growth in its business, including its textile business, retail and distribution business, and garment manufacturing business. Among them, the retail business was notable. Sales of this business amounted to HK$3,444 million, an increase of 9%. %, accounting for 44% of the group's total turnover. In the financial statements, the retail business is still losing money, but the loss is actually due to the huge expenditure incurred by the expansion of the shop in the previous year. At the same time, in its annual report, it also shows that the Mainland is still the focus of retail business development. The Group has stores in more than 260 cities.

From the annual report of Tak Wing Group, it can be observed that Baleno has occupied an important position in the group.

In 1996, the Hong Kong-listed company Tak Yong Jia Group spent money on the acquisition of Benny Road and its trademark (having a 54% stake in Baleno Group) and began to enter the retail retail distribution business. After the acquisition, Balneo launched a brand new image in the Mainland, Hong Kong, and Taiwan. Baleno’s trademark quickly took root in large and medium-sized cities.

Since 1999, Tak Wing Kai has also invested in the clothing business in the Mainland, which has led to a complete industry structure in China: production and sales of knitted fabrics, cotton yarns, garments and retail distribution of garments. Currently, 13% of the knitted fabrics produced by Tak Wing-kai are sold to the group's joint-operating garment business. 80% of the fabrics in the associate-clothing business are supplied by the knitted fabric business, and the retail business is approximately 40% of the sales of the Baleno Group. The garments are supplied by the Tak Wing Kai associate garment business. Three businesses in the structure support each other. The central part of this pattern is the distribution and retail of Baleno.

With strong backing support, Baleno Road runs all the way.

Of course, for De Yongjia, accelerating the pace of expansion in the Mainland has another meaning, paving the way for the split-up listing of Baleno. Ding Jiezhong, an executive director of Tak Wing Kai, previously stated that Baleno’s ideal development is the potential for an independent spin-off. However, the current business scale is still not enough to be independent. Therefore, it is not an unlisted market, but rather an opportunity.

Faced with this argument, Chen You, chairman of Guangzhou Friendship (12.95, 0.30, 2.37%) Baleno Garment Co., Ltd., did not deny that he believes spin-off listing is a good thing and proves that the company is developing.

Do you love the "rich game"?

In June of this year, Morgan Stanley analysts met with the management of Tak Wing Kai and issued a research report. The bank pointed out that the Beijing government strictly fights the cloth factories on environmental protection grounds, and that the company plans to spin off the retail business listing. Yongjia stock price brings positive factors. The management team of Tak Wing-kai also expects that the spin-off of the retail business of Baleno will bring one-off benefits.

Obviously, in such contacts, the meaning of high-level officials is already obvious. Splitting the listing is a good win-win solution for De Yongjia and Baleno.

At the same time, splitting the listing is not a matter of “dismantling” the spirit. It is actually a double-edged sword. Only when the listed company's market value reaches a certain scale, the business foundation is solid, and there is a first-rate management level, splitting the listing will be a wise choice.

If the listed company does not fully understand this, it may eventually be counterproductive. Therefore, in a sense, spin-off listing is actually a kind of "rich-playing game for talented people."

A security industry veteran told reporters: The collapse of the Blue Bird Bridge is not unrelated to the substantial reduction of the parent company’s ability to continue operations after the spin-off. Therefore, for those listed companies with “parent to child”, the subsidiaries with good development prospects are split. This means that the investment value of the parent company is reduced and the financing function of the company is lost. Such a listed company should not be separated. It's good.

When asked by reporters when the Ting Yong Jia Group was split from Baleno, the person said that the U.S. government announced in recent years that it would re-impose quotas on three types of imported clothing from China. For the downstream product manufacturer Tak Yong Jia Group, It is indeed affected, resulting in a drop in corporate profits, but overall, the company still maintains moderate growth. In response, if Benny Road is split, it will have a different impact on the parent company.