What Are The Reasons Behind Jewellers Buying A Clothing Brand

Hong Kong Jewelry tycoon, with HK $2.56 billion, has "copied" Giordano.

The acquisition of Danfu capital by Danfu capital was announced on June 23, including the cancellation of shares of dazaonu. The maximum amount involved in this offer is HK $2.56 billion (about RMB 2.182 billion).

According to the offer, Chow Tai Fook will buy Giordano at HK $1.88 per share, which is about 18.2% higher than the HK $1.59 per share before the suspension.

However, the purchase price of HK $1.88/share was strongly opposed. David Webb, zodano's second largest shareholder, said the price was far below the fair market price and called on other shareholders to reject the offer.

As the purchaser, Chow Tai Fook has become the "old river" of capital operation. Behind it is the Zheng Yutong family, one of the four big families in Hong Kong. Its investment antenna also involves many fields. Although Jordan is its test in the field of clothing, the purchase price can be called "careful calculation".

　　 With 140 billion Hong Kong's third largest family, 2.56 billion bought more than 2000 clothing stores

There are two reasons for jewellers to buy a clothing brand.

In recent years, the Zheng family has been expanding the franchise system of Chow Tai Fook. At present, there are 5764 jewelry stores in the world, which is the largest gold jewelry enterprise in the world. In the future, Chow Tai Fook also plans to sink the channel to the third and fourth tier cities. And Jordan has 2056 clothing stores in the world, most of which are located in the golden area near the street, which is a good supplement to the offline layout of Chow Tai Fook.

More than 2 billion people have bought more than 2000 clothing stores, and the average price of each store is only about 1 million yuan. I'm afraid it's a very cost-effective business.

Then again, Jordan's dividend ratio is very attractive. As early as 2011, Zheng Yutong spent HK $1.05 billion to invest in Giordano and obtained 14.58% of the shares. After that, they continued to increase their holdings, which made a lot of money. In 2012, for example, Jordan paid a final dividend of HK $0.23. Zheng Yutong, who held 23% of the shares at that time, could receive a dividend of about HK $80.48 million.

However, Mr. Jordan's ownership structure is fragmented, and to gain control, Chow Tai Fook has to persuade other public shareholders, including David Webb. According to the ownership structure of Giordano, Chow Tai Fook is the major shareholder of Giordano, holding 24.57%, 1.79% and 73.63% respectively (including 5% of David Webb, the second largest shareholder).

Zhou said the main reason for the acquisition was the fierce market competition, and Jordan needed to make changes. After the acquisition, Jordan will be privatized, but also stressed that the original management will not be replaced. Some analysts believe that the Zheng family's low price to start Jordan, is to sell again, before the shareholders were too dispersed, unable to control, unable to attract suitable buyers.

The Zheng family behind Zhou Dafu is also familiar with capital operation.

The two big business groups of Mr. Kwok and Mr. Chow Tai Shing, known as Mr. Li and Mr. Cheng, started their business development in Hong Kong. According to Forbes 2021 Hong Kong rich list, Zheng Yutong's family ranks third with 22.1 billion US dollars (about 140 billion yuan).

In the 1930s, 13-year-old Zheng Yutong left Shunde for Macao to join his father's friend Zhou Zhiyuan. Zhou Zhiyuan runs a Fortune company in Australia, which is the predecessor of Chow Tai Fook. Zheng Yutong married Zhou Cuiying, the eldest daughter of Zhou Zhiyuan. In 1956, Zheng Yutong inherited Zhou Dafu from his father-in-law.

Zheng Yutong is known as "shark gall Tong" for his decisive and brave business. He set up 9999 thousand gold (that is, 99.99% gold content) to break through the encirclement with high quality. Later, he set foot in real estate and established the new world group.

With the continuous accumulation of wealth, the investment territory of the Zheng family is also expanding. In addition to the layout of the jewelry industry chain upstream and downstream, in the financial, medical, scientific and technological fields are also blooming everywhere.

　　 In the field of finance, in 2015, Chow Tai Fook invested in Xinye technology, a P2P online lending service website, and Xiaoying technology, a financial technology company. These two companies were listed on the New York Stock Exchange in 2017 and 2018 respectively. In 2018, Chow Tai Fook strategically invested in Jincheng consumer finance, a consumer finance company jointly funded by Bank of Chengdu and Malaysia's Fung Lung Bank. In 2021, Chow Tai Fook strategically invested in the smart investment and trading software for Hong Kong and US stocks.

　　 In the medical field, in 2017, Chow Tai Fook invested tens of millions of RMB in the maternal and child health management platform "Mummy knows". In 2020, Chow Tai Fook invested in zap surgical system, a California surgical robot company. In 2021, Chow Tai Fook invested in the child health management software "Youmiao". In 2022, round a invested in clinical cro Shengfang medicine.

　　 In the field of science and technology, in 2019, Chow Tai Fook invested in aibee, a solution provider for artificial intelligence industry. In 2022, the B + round of zhoutai Fook invested in Yingcheng technology, an automatic driving technology enterprise.

In addition, Australia is also a key area for the Zheng family to invest in. From service agencies for studying abroad, to tourist resorts, and even energy. Although the acquisition of Giordano is Chow Tai Fook's test in the field of clothing, its market is also in Australia. In 2021, it contributed more than HK $1 billion in revenue to Jordan, accounting for 30% of the total.

Therefore, zhoudanfu's investment in Australia is also helpful.

The market value evaporated by HK $6 billion, and the "Pedestrian Street brand" is not in sight

In the face of low prices, Jordan has witnessed the highlight of the domestic clothing industry.

In 1981, Giordano was founded in Hong Kong. He was once known as the "three giants of fashion clothing" with Benny road and Fort Shilong.

At the beginning of the 21st century, Jordan used to be the pronoun of youth and fashion. In the most prosperous business district in the city, there is no lack of Jordan stores. In 1991, Giordano was listed on the Hong Kong Stock Exchange and officially entered the Chinese mainland market the following year. At its peak, Jordan's revenue reached HK $5.848 billion, with a market value of nearly HK $9 billion and nearly 2700 stores, making him once the best-selling leisure clothing group in Asia.

Even the founder of UNIQLO, Yanai, was a "admirer" of Giordano. He had traveled all the way to Hong Kong from Japan to visit the management of Giordano, hoping to learn from him and seek cooperation. Although the two sides did not reach a cooperation in the end, Liujing learned a complete set of clothing supply chain secrets, which laid the foundation for UNIQLO's future development.

Ironically, the status of the two brands has already reversed.

UNIQLO has grown into a well-known clothing giant in the world, while the former "teacher" Giordano has been on the decline. The revenue gap between the two has exceeded 100 billion yuan.

In 2012, China's clothing market officially turned to the turning point, and many "pedestrian street brands" were declining. From this time, Jordan also began to go downhill. In 2012, Jordan's revenue in the mainland decreased by 6%, and 163 stores in the mainland were closed. By the end of 2021, the number of Jordan's global stores was 2056, with a market value of only HK $2.9 billion, more than HK $6 billion evaporated from the peak market value.

Giordano is no exception.

JeansWest, the king of jeans, went bankrupt in 2015. In 2017, JeansWest Australia was acquired by howsea limited. In January 2020, JeansWest Australia subsidiary also announced bankruptcy liquidation.

Benny Road, a Hong Kong funded fashion brand endorsed by Andy Lau and Faye Wong, closed about 3000 stores in six years from 2010 to 2015. At present, there are only more than 1000 stores in China. In 2016, the parent company, deyongjia, sold Barney road to Shanghai Huiye industry with a price of 250 million yuan.

In early December of 2019, Esprit group, the parent brand of "mainland China" and "global", will be operated by Esprit group on behalf of its parent brand in Europe

Harvard's "rich three generations" give up investment banking and go home to take charge of 100 billion "cash cows"

The Zheng family, which intends to acquire Giordano, is also very active in the primary market.

Zheng Zhigang, 41, the third-generation successor of the Zheng family, graduated from Harvard University and worked in investment banks such as UBS and Goldman Sachs for three years. After that, he returned to his family and helped New World Department Store successfully enter the Hong Kong stock exchange.

The new world at the helm of Zheng Zhigang is a cash cow. According to the financial report, as of December 31, 2021, the total funds available for the development of the new world amounted to HK $103.2 billion. The cash flow was extremely abundant and the debt ratio remained low throughout the year.

Zheng Zhigang is also the founder of K11, the world's first art shopping center. K11 was profitable in its first year of operation. Even when the epidemic is at its worst in 2020, the new world development financial report is still strong. The medium-term financial report shows that the sales of K11 art mall and K11 musea in Hong Kong increased by 56%, far exceeding the overall performance of Hong Kong retail.

In addition, Zheng Zhigang is also very active in the capital market. In 2017, he founded C capital, aiming at the consumer brand of young people, and invested in a number of star enterprises such as Weilai, Xiaopeng, xiaohongshu, huolala, Shangtang technology, and Helen's tavern.

Spac is also involved. In 2021, Zheng Zhigang founded artisan acquisition Corp., a special purpose vehicle company, and prenetics, a consumer gene testing company, which was listed on NASDAQ. One of the latter's shareholders is former England international Rio Ferdinand, and prenetics won the nucleic acid detection business of major events in the "British sports circle" during the outbreak.

In addition to direct investment, Zheng Zhigang also started LP. Tianyan check information, the new world strategic investment with Zheng Zhigang as its chairman, has become the LP of Gaorong capital through the Zhengyuan strategy of private equity institutions. It is reported that the new world or a well-known venture capital institutions of LP. Zheng Zhigang is also a shareholder of Shenzhen Qianhai Qianyi Zhihe 10 investment partnership (limited partnership), and its main body is Qianhai Indus M & A fund.

Despite repeated outbreaks and setbacks in industry, the Zheng family still maintained sufficient capital, which was also inseparable from the income contributed by Chow Tai Fook. In fiscal year 2022, the turnover of Chow Tai Fook reached HK $98.938 billion, up 41% year on year; The profit attributable to shareholders reached HK $6.712 billion, up 11.4% year on year.

In short, the sufficient cash flow makes the Zheng family in the "buy buy buy" acquisition road very leisurely.

Growth is not a case in point. During the epidemic period, luxury jewelry brands basically achieved sales growth against the trend, even exceeding the level before the epidemic.

　　 For example, LVMH, a luxury group, has a record revenue of 64.22 billion euro (about 69.9 billion US dollars) in 2021, which is 44% higher than that in 2020 and 20% higher than that in 2019 before the outbreak of the epidemic.

　　 Hermes' revenue in 2021 was 8.982 billion euros (about US $9.78 billion), compared with 6.389 billion euros in 2020, a year-on-year increase of more than 40%. Among them, Asia contributed the most, with a total revenue of 5.227 billion euro, far exceeding the total revenue of Europe and the United States.

　　 Prada, the Italian fashion brand, has a net income of 3.366 billion euro (about US $3.66 billion) in 2021, which is 41% higher than that in 2020 and 8% higher than that in 2019.

　　 In 2021, the French luxury goods giant Kaiyun group, the parent company of Gucci and Saint Laurent, reached 17.645 billion euro (about 19.2 billion US dollars), with a year-on-year increase of 34.7%, exceeding the pre epidemic level.