There is no need to divide the main business and side business, making money is the main business. Li Rucheng once responded to those who questioned Youngor's "not doing his job".
Fashion, real estate and investment have always been the three major components of YOUNGOR's business map. Although it started with clothing, looking back on the development history of YOUNGOR, the real estate and investment business is the core of the performance growth**. In those years of the real estate industry, YOUNGOR never shied away from the importance of the "real estate" business.
However, with the deep consolidation of the property market and the limited development of real estate business, Youngor also intends to gradually fade it.
Not long ago, Youngor officially announced that it intends to change the company's Chinese name from "Youngor Group Shares***" to "Youngor Fashion Shares***" and its determination to return to the fashion industry is on paper.
The apparel business remains at the core of the Group's future development. Li Rucheng's tone has also changed. But is Youngor really willing to give up the big cake of real estate?
Youngor's entry into real estate can be traced back to the early 1990s. So far, YOUNGOR has been deeply engaged in the real estate field for 30 years, and has developed about 3 million square meters of various properties.
In 1992, Youngor and Macau Nam Kwong Company established a real estate company, and acquired 7 plots of land in the suburbs of Ningbo and Beilun, with a total area of 870,000 square meters, which was the starting point of Youngor's entry into real estate. As a result, YOUNGOR has also become one of the earliest enterprises involved in real estate in China's garment industry.
At that time, the garment industry was still the main business of YOUNGOR, and in 1994, the share of YOUNGOR shirts reached the first place in the country. In contrast, the real estate business is nothing more than a "small fight".
Therefore, when Youngor went public in 1998, the real estate business was also divested from the listed company for a time. Continuing to expand the garment business was the core task of Youngor at that time.
Data show that from 2001 to 2010, the business scale of Youngor's clothing sector increased from 167.6 billion yuan increased to 603.9 billion yuan, equivalent to an average annual growth rate of 36%.
However, after that, the Youngor clothing business entered a decade of stagnation, and the real estate business began to venture.
The first signs of a rebound in Youngor's real estate business came in 2002, when its real estate performance was 5300 million yuan. At that time, China's real estate market was beginning to enter the first period, and Li Rucheng also timely loaded the relevant business with a price of more than 80 million yuan into the listing platform.
Since 2004, YOUNGOR has begun to emerge in the real estate industry, and has won Diwang projects in Suzhou, Hangzhou, Shanghai and other places, becoming a "dark horse" of real estate at that time.
In the hottest years of the property market, Youngor was also the main force in the local auction market. According to the data, from January 2019 to October 2021, Youngor took a total of 16 land parcels through listing, auction, etc., mainly distributed in Ningbo, Shanghai, Lanzhou, Dehong and other places. This is one of the reasons why the market sees it as a "real estate company".
Even during the epidemic and the trough of China's real estate market, Youngor was still active in the land auction market, participating in the auction of a number of popular land plots, and buying two residential lands in Shanghai and Ningbo for more than 4 billion yuan.
In October 2021, Youngor threw 175.6 billion yuan to acquire an ordinary residential land in Lingang, Shanghai;November, again to 194.2 billion yuan, premium rate 157%, bidding for 1 case in Ningbo with a construction area of 9320,000 square meters of residential land. The total expenditure of the two plots has exceeded the net profit of Youngor in the first three quarters of the year, and its net profit in the third quarter was 213.8 billion yuan.
Despite the aggressive streaks around, the scale of the Youngor real estate sector has not grown fast. In 2010, the amount of real estate pre-sale reached 11.8 billion yuan, but in 2020, it is still 10 billion yuan, and the real estate sales scale that year is only 12.9 billion yuan.
In the first decade of China's real estate market, Youngor seems to have missed the opportunity to develop on a large scale. But from the current point of view, Youngor, who has adopted the development strategy of "maintaining stability", may have chosen the right one, and the ship is good to turn around after all.
Youngor has also said that the real estate business has never pursued scale, and has not been like other real estate companies to ensure income through rolling development, "real estate is delivered one counts as one", as long as there is an opportunity to make money in the real estate industry, it will be done, mainly to see profits.
Of course, Youngor is not without dreams of going big. It is only because of its first land acquisition, the average floor price of new projects is 30% higher than the average price of the project, coupled with the adjustment of the real estate market, the difficulty of removing the first land also restricts its development.
In any case, although the scale has not been rising, the real estate business has always brought stable and considerable profits to YOUNGOR. According to the data, from 2007 to 2020, the net profit of Youngor's real estate business accumulated about 13.7 billion yuan, and since 2015, this sector has brought more than 1 billion yuan of net profit to the company every year. This is also the driving force for YOUNGOR to always stick to the real estate business.
But it is precisely because of this that Youngor has been criticized for "not doing his job". The American financial magazine "Business Week" once commented that Youngor "except for the first and real estate investment business, other businesses have become insignificant". This annoyed Li Rucheng somewhat. But objectively speaking, in that era when the clothing industry was stagnant, real estate and investment also "saved" Youngor in disguise.
If it weren't for this round of in-depth regulation, perhaps Youngor would not be in a hurry to choose to dilute the label of "real estate" business.
From 2002 to 2022, YOUNGOR's revenue increased from 24700 million yuan increased to 148200 million yuan, a sixfold increase in 20 years. Among them, the real estate business started from 5300 million yuan increased to 85500 million yuan, an increase of more than 16 times, and the clothing business from 17800 million yuan increased to 63200 million yuan, only about 36 times.
However, the real estate business, which used to support half of the country, has also rapidly gone downhill. In the first three quarters of this year, the income of the distressed real estate business declined, and the performance of Youngor also fell sharply.
The financial report shows that in the third quarter of this year, Youngor's revenue was 745.8 billion yuan, a year-on-year decrease of more than 4185%, net profit attributable to the parent company 269.3 billion yuan, a year-on-year decrease of about 1.5 billion yuan, a year-on-year decrease of 358%。
As of the end of the third quarter of this year, the revenue of Youngor's real estate business was about 237 billion yuan, net profit 33.1 billion yuan, down year-on-year65%。
However, due to the good sales of its projects such as Ningbo Minghu Yiqiu Garden, Shanghai Lingang Xinghai Yunjing, and Wenzhou Future City No. 1, the net cash inflow provided by Youngor's real estate business increased by about 62 percent year-on-year700 million yuan.
Although the profit of a real estate project is often 500 million yuan or 1 billion yuan, textile and garment is an industry that can be done forever, and the money earned by selling clothes one by one is more stable and longer. After making a lot of money in ** and real estate, Li Rucheng sighed so emotionally.
In the future, we will shrink the investment in real estate development, strictly prevent real estate risks, and adjust the investment business structure. Li Rucheng made it clear at this year's semi-annual results meeting.
In the first three quarters of this year, Youngor's investment business recovered 69.8 billion yuan, net profit of 171.1 billion yuan, a year-on-year increase of 2951%, accounting for 63% of the company's total profit54%。
In terms of investment, YOUNGOR has invested in more than 20 A-share listed companies, including Bank of Ningbo, Shanghai Pudong Development Bank, CITIC**, SAIC, Science and Technology Innovation, etc., and has established a professional equity investment management team, and also invested in the establishment of a private equity institution Capstone Investment.
According to the financial report data, from 2007 to mid-2023, Youngor's cumulative net investment income reached 476400 million yuan, and the total net profit attributable to the parent company is 54 billion yuan. Among them, taking 2020 as an example, in the same year, Youngor fashion, real estate and investment sectors achieved a net profit of 9600 million, 165.7 billion, 465.5 billion yuan.
But obviously, it is still the real estate and investment business that has been responsible for "raising the family". Until today, although the real estate business is sluggish, the investment business has always been the main force of YOUNGOR's performance growth.
As early as 2019, Youngor announced that it would "no longer carry out financial equity investment in non-main business areas and further focus on the development of the main clothing industry".
Fortunately, after a cyclical cycle, YOUNGOR's clothing business has also begun to show recovery growth.
In the first three quarters of this year, the revenue of Youngor's fashion business was about 421.6 billion yuan, net profit attributable to the parent company of 64.9 billion yuan, a year-on-year increase respectively63%。
As of the end of the third quarter, Youngor had 1,750 self-operated stores, a net decrease of 103 from the beginning of the yearBusiness area 44830,000 square meters. The average sales volume of self-operated stores was 1.87 million yuan, an increase of 21 percent year-on-year70%。
From the perspective of the proportion of the three major businesses, in the first three quarters of this year, Youngor recorded revenue of 74600 million yuan, with fashion and real estate businesses contributing about 68% and 32% respectivelyNet profit attributable to the parent company was 26900 million yuan, with fashion, real estate and investment businesses contributing % and 64% respectively.
This somewhat gave Li Rucheng and Youngor the confidence to shrink the real estate front. However, "contraction" does not mean "giving up". "As long as there are suitable investment opportunities and market opportunities, I will still do it. Youngor said.
The residential market is difficult to do, and it may be a good choice to switch to commercial real estate.
Recently, Youngor shot again with 6800 million yuan to acquire the Chengdu Meibang Kyoto Building Store (i.e., Chunxi Road Meibang Building Store) located at No. 43, Dakejia Lane, Jinjiang District, Chengdu, Sichuan Province, which is the fourth time that Meibang Apparel has made a real estate to Youngor, and the transaction amount exceeds the total amount of the previous three times.
Earlier in October 2022, Youngor won with 1900 million yuan to acquire a store in Optics Valley World City, Wuhan CityIn December 2022, Youngor ended with 1300 million yuan to acquire the store at No. 145 Zhonghua Middle Road, Guiyang CityIn June 2023, Youngor acquired Meibang Apparel Shenyang New World for 300 million yuan, and Youngor has spent a total of 1.3 billion yuan to acquire four stores of Meibang Apparel, which are located in Wuhan, Guiyang, Shenyang and Chengdu.
This is seen as an investment in the apparel business. Youngor said that after the acquisition, these stores will open Youngor's own stores for the clothing business.
On November 17, Li Rucheng, chairman of YOUNGOR, put forward three measures for returning to the main business at the third quarter performance briefing of 2023: the company will strengthen and expand the main business, strengthen and enhance the core brand of YOUNGOR, and explore and cultivate multi-brand operationsExplore new retail models and strengthen the construction of online and offline in-depth integration of fashion experience halls;Actively adjust the channel structure.
Many people pointed out that with the change in investment thinking, the good rate of return shown by the shops is expected to become a new long-term asset. According to the data, Shenzhen's residential rental return in the first half of this year was 132%, but many shops can reach 4-5%, which exceeds the social risk-free rate of return.
At the same time, China's commercial real estate market is also recovering rapidly. JLL's latest capital tracking data shows that total commercial real estate investment in the Asia-Pacific region in the third quarter of 2023 was US$21.3 billion, down 22% year-on-year, while Chinese mainland transactions reached US$4.7 billion, up 43% year-on-year, making it the most active market in the region.
Returning to the "fashionable" Youngor chasing commercial real estate does not seem to be contrary to harmony, and from the perspective of industrial attributes, it is even somewhat complementary. However, it is not known whether commercial real estate will be L-shaped ** or V-shaped ** after bottoming out;In terms of the prosperity of the investment market in the past two years, Youngor's 64% profit attributable to the parent company is also a bit precarious. It can be seen that whether the main clothing business can bring stable cash flow to Youngor is the top priority.
Or perhaps, Li Rucheng, who is now talking about fashion again, is waiting for the next reincarnation.