“Investor Network” Wang Jianfan
Since Annel proudly entered the capital market as “China's No. 1 children's clothing company” in 2017, it has become the focus of attention of many investors. However, in the face of fierce competition in the children's clothing market and continuous changes in the consumer environment, ANEL's business situation is facing serious challenges.
Since 2020, the company's revenue has continued to decline, to 1,257 billion yuan, 1,186 million yuan and 938 million yuan respectively, with an average annual decline of about 10.71%. At the same time, the company's net profit losses have also deteriorated year after year, from -468.15,900 yuan in 2020 to -237 million yuan in 2022. The company has not escaped losses in 2023, and the net profit loss is expected to be between 758.7762 million yuan and 118 million yuan. According to reports, the company has closed 111 direct-run stores and 64 franchise stores in the first half of 2023.
Despite the worrying financial situation of Annel, the stock price performance fluctuated abnormally. Since February 8, the stock price has surged 169.11% cumulatively in just 14 trading days, and achieved 7 consecutive shares between February 27 and March 6. This was followed by two consecutive days of decline on March 7 and March 8. On March 21, Annel's stock price hit a new high of 22.55 yuan at the beginning of the market, but then fell rapidly and closed down. As of April 3, the closing price was 14.1 yuan/share.
440 million yuan of cross-border big data
The reason for this round of stock price fluctuations for ANNEL may be catching up with a wave of big data. At the end of last year, the company announced plans to acquire 22% of Shenzhen Innovation Technology Co., Ltd. (hereinafter referred to as “Innovation Technology”) for 440 million yuan, with the intention of going deep into the big data field.
This move is certainly a huge crossover for a company focused on the production of children's clothing. Faced with widespread questioning, Annelle explained that she decided to enter the big data industry because she saw the important impact of big data on the future development of the manufacturing industry, and participating in the investment innovation sector was part of her experiment.
According to reports, Innovation Technology was founded in 2005 and focuses on big data storage systems, covering data centers, cloud services and big data services. In this equity acquisition, the overall valuation of Innovation Technology was 2,025 billion yuan, with a value-added rate of 1167.45%. As of September 2023, the company's total assets were $867 million, and accounts receivable accounted for 72%, reflecting liquidity challenges. Furthermore, in September 2022 and 2023, the company's operating cash flow was negative, of -17.532,700 yuan and -22.267,800 yuan, respectively, which revealed the pressure on capital operations.
It is worth investors' attention that behind Annel's large investment of 440 million yuan, the core security issue of the company's cash flow has been touched upon. As of September 30, 2023, the company's monetary fund balance was only 719 million yuan. Considering the balance of the special fund raised account of 225 million yuan, the actual cash available was less than 500 million yuan. Faced with cash flow pressure, Annelle said in a reply letter that as of September 30, 2023, the company had obtained a bank credit line of 950 million yuan, and the amount that can still be used is 750 million yuan. This borrowing strategy is certainly a financial warning sign that cannot be ignored.
Furthermore, Annel's cross-border acquisition path did not happen overnight; the key question arises whether other shareholders of Innovation Technology will exercise priority purchasing rights. Until now, ANEL has not received a clear written notice from her counterparty Shenzhen Zhuoyun Zhichuang Technology, leaving the acquisition case shrouded in uncertainty. On March 29, Annelle received her third recent letter of concern from the Shenzhen Stock Exchange, and was once again asked if there were any disputes or major uncertainties about the acquisition. On April 3, Annelle issued an announcement regarding the delay in responding to the Shenzhen Stock Exchange's letter of concern.
The trend of executives reducing holdings is in the spotlight
In fact, this is not the first time that Anna has chased the bandwagon with cross-border big data. In August 2022, the company decided to enter the field of antiviral and antibacterial textiles and set up a joint venture to actively develop this emerging market.
On November 17, 2022, Annel announced that its anti-viral and antibacterial fabric is expected to enter mass production at the beginning of the following year. Immediately after this news was released, the company's stock price rose and stopped the next day. Immediately after that, on November 24, the company announced the news of cooperation with the Shenzhen School Uniform Association, and the stock price rose and stopped once again. From November 18 to December 7, in just 14 trading days, ANEL's stock price went up and down an astonishing 10 times. During this period, the company actively answered various questions about anti-viral fabrics through the investor interactive platform, demonstrating strong confidence in the future of the product.
However, behind this enthusiastic publicity and market reaction, differences between actual product progress and publicly disclosed information began to attract regulatory attention. On January 3, 2023, Anna and her director, Ning Wen, received a regulatory letter due to inaccurate and incomplete information disclosure issues in the anti-viral antibacterial fabric project. The Shenzhen Stock Exchange pointed out that the company failed to objectively and completely reflect the actual progress of the project, mass production time and product results, and did not fully indicate related risks. It certainly revealed the company's deep-seated problems with project management and information disclosure.
In this context, the reduction in holdings carried out by senior management of the company during the period of rising stock prices is particularly remarkable. According to incomplete statistics from relevant media, from November 18 to 25, 2022, the company's then-director and deputy general manager Long Yan, and then-director Xu Wenli reduced their holdings by a total of 2.362,500 million shares and cashed out more than 26 million yuan.
A lesson learned from the past, a master of later life. Cao Zhang and Wang Jianqing are the founders and actual controllers of the company, and the actions behind them are worth watching. Shortly after Annelle announced her intention to acquire shares in Innovation Technology, Wang Jianqing began a large-scale holdings reduction. On December 28, 2023, she signed an agreement with Zhejiang Yongxi and Jinjiang Qianji to transfer 6.00% of the listed company's shares to the two institutions at 14.08 yuan/share, with a total transaction consideration of 360 million yuan.
I won't know who is swimming naked until the tide recedes. Currently, Annelle's acquisition plan for Innovation Technology is still undecided, and “Investor Network” will continue to pay attention to this. (Produced by Thinking Finance) ■