Suning sales loss is big

Price war hit, Suning appliances (002024, shares bar) (002024) shares fell, 10 points before and after 3.57%. Although Liu stressed that the price war is not to play Su Ning's share price, but Su Ning's investors have not bought it. From the wonderful analysis of Miao (Portfolio Manager in Hedge Fund), from the financial point of view to analyze the price of the postwar suning, where does the money come from?

Suning sales loss is big

If we assume that Jingdong and suning entity shops are reduced by 10%, then the direct impact of the two decline in sales is: Jingdong: 15% X 0.9 + 85% = 98.5%, sales fell 1.5% suning: 60% X 0.9 + 40% = 94%, sales decline 6% and this is only to consider The price factor, has not considered the stock discount, store manual, customer transfer and other factors. So the only one, Beijing East can be one enemy four to stall Suning's income.

Can Su ning make money?

Suning is a listed company, can do only two: 1. Additional 2. Creditor's rights financing issue needs the shareholder's support, especially needs the support of the non-specific shareholder. Suning current major shareholder in addition to Suning appliances group and Jindong himself, there are yifangda, rich and other funds, as well as Morgan Stanley. The plans for additional offerings are likely to be opposed by these investors, and if Su Ning insists, these institutional investors will certainly sell their shares. If so, the direct damage will be Jindong (27.9%) and Suning Group (13.47%) themselves. The so-called "move stones to their feet."

On the other hand, if Su Ning carries on the debt financing, just like today market rumor "8 billion yuan 10 year company debt", the investor already voted with the foot: the day decreases 7.11%. So, to a large extent, because investors believe that Suning will gamble to start the price war, its future earnings will be a big drop: as ordinary investors, there is no need to go with suning appliances "share of destiny."

Even more tricky, as a listed company, Suning's financial situation is placed on the obvious: A. Market capitalisation has evaporated nearly 30% since the beginning of the year, at 43.6 billion. B. Asset-liability ratio 61.5% (2011) c. Net profit decline in the first half of 29.49%d. July 7 has just completed the increase, raise funds 4.6 billion. (and 8 billion after one months)

These figures will not allow investors to have a good association, and if the possibility of the 8 billion debt, Suning's balance sheet will rise to about 70% of the extent. It is no surprise that investors are selling stocks, or even refusing to participate in additional offerings.

From this perspective, suning in order to maintain the current share price, the current method should be adopted is share repurchase, management overweight, and deferred further financing action. Although Jindong's brother Zhang Guiping control another listed company Suning Global (000718, shares bar) (000718), it seems that the brothers two "deep pockets", but on the one hand Suning global real estate developers, book funds only about 1.7 billion, who save who is not necessarily On the other hand jindong in order to promote the stock price of Suning, has been for a period of overweight, its successor capacity and continue to overweight will probably have a big injury. If in this case, suning appliances also have to go on debt financing, I am afraid that eventually will have to send a convertible bond or even MSCB to get the money (do not know MSCB is legal?) )。

On the other hand, Jingdong is a non-listed company whose financial and operating conditions are not known to many "theatre" investors. With the outside speculation and Liu I release words, are "PE and Jingdong is a rope on the grasshopper, must be in the same retreat." Although this may be exaggerated, I believe there is a sizeable "community of interests" in the BoE's board of directors.