Peak Sports listed: Each next year will open 1,000 stores

Peak Sports will be listed on the Hong Kong Stock Exchange on Sept. 29 and calculated at an issue price of HK $ 4.1. Pick's IPO will raise HK $ 1.7 billion, up from the previous estimate of HK $ 1.5 billion. Excluding the over-allotment option, Peak's total capital stock after IPO is 2.098 billion shares, the company's total market capitalization of 8.6 billion Hong Kong dollars, Xu Jingnan family holds a total of about 61% stake in Peak, this calculation, Xu's family more than 5.2 billion Hong Kong dollars.

Peak Sports CEO Xu Zhihua

Three rounds of financing

"21st Century": Since Hao Jia listed in 2005 to the company proposal, why this step so late, why the listing of Hong Kong?

Xu Zhihua: Hao Jia can be said that the company's financial investors, more financial advisers role. Hao Jia listed in 2005 proposed to the company, we have the idea of ​​going public. The investment was not implemented until January 2007, because the company signed an agreement with Haojia, the company's financial statements in 2006 came out, the funds came in place.

The introduction of Sequoia investment, it should be said that the company is the real deployment of the beginning of the listing, Sequoia is the United States private equity funds, on the one hand we can get more international resources, on the other hand can also provide us with part of the funds for business development. So the idea of ​​going public is early, but the preparation time is longer. The company originally planned to be listed in 2008, but due to market reasons, it had to be postponed.

The choice of listing location, the company is considered: the company's position is the international century-old, in the market, capital and shareholder structure are all looking forward to internationalization, which requires overseas listing. Hong Kong speak Chinese, easy to communicate, from the company's main market close, the HKEx a very good influence, so choose Hong Kong.

"21st Century": Pick is how to choose the three rounds of financing?

Xu Zhihua: Hao Ka shares is the company's first round of financing. The second round of financing started in 2007 with the earliest investor being Sequoia, and later the introduction of a shareholder group composed of a number of minority shareholders such as Shenzhen Innovation Investment. When the company initially planned to go public in 2008 and introduced a minority shareholder team such as Innovation Cast, the company signed an agreement to provide them with an exit mechanism above their investment limit if the company failed to go public before the end of April 2009.

The market is delayed listing until September this year. The third round of financing was conducted in April this year partly due to the withdrawal of funds from part of the second round of financing and the consideration of investor options to bring about an extension effect for the company.

The third round of financing, the company introduced the CCB International and Legend Capital, in November 2008, CCB International and Lenovo expressed their idea of ​​shares, and later reached an agreement.

CCB is the company's major current account bank and it is expected that it will help the company in terms of credit granting and financing in the future. Choose Lenovo investment, on the one hand Liu Chuanzhi itself is a famous entrepreneur, Lenovo has a better brand and influence, enhance the company's brand and business development, have a positive role in promoting.

Investment, certainly hope to get a good return on investment. Peak three-year sales compound growth rate of 80%, the company's high growth rate and sports brand future development prospects should be more valued.

30% -40% growth rate

"21st Century": In terms of fund-raising purposes, 361 degrees and 38.9% of peers are used for promotion and sponsorship, while Peak takes 48.3% for advertising and marketing. Is this strategy too dependent on advertising and marketing rather than on Quality or R & D investment worries?

Xu Zhihua: On the surface, most of the company fund-raising for advertising and marketing, rather than support the development of the main industry. But in fact, nearly 20% of the company's fund-raising is for product development and production expansion, and this is one of them. In addition, after 20 years of development, the company in product quality and production capacity has considerable experience, combined with only 40% of footwear production and 10% of garment production is done by the companies themselves, others are outsourced. It can be said that the company in product quality and production have been more mature, is the company's advantage.

On the other hand, for many Chinese companies, brands and channels tend to be short-cut, which is what the company currently hopes to enhance. Through investment, to consolidate the brand influence and expand channels, its purpose is to promote the company's product sales, in a real sense, this part of the investment is also used to support the development of the main industry. In the premise of doing a good job in quality and production to ensure that enhance brand and expand channels is a top priority.

"21st Century": Peak's core competitiveness is what? How to achieve high growth target?

Xu Zhihua: The future of our strategy is to do a professional sports brand, driven by the professional sports people's professional experience, improve more cost-effective products. NBA and the company have a long cooperation time, NBA players wearing Peak shoes, itself confirms product quality. From 2006 to 2009, the three-year compound annual growth rate of the company's sales was 80%. It can be said that there is a great relationship between brand promotion and channel widening. In the future, we will also work hard in this regard. However, in the long run, it is impossible for our CAGR to remain at 80%. However, in five years, we have set a target of 30% -40%.

Extension of the product line will do, the future will be involved in tennis, football and running sports and other fields.

From the international experience, sports brand single brand, single style can be successful in the short term, the company's main energy will be used to enhance the Peak brand, when the company reached a certain level of profitability, does not rule out the multi-brand through M & A The possibility of operation, the company's strategy is the internationalization of resource allocation, both domestic and international acquisitions are possible, but there is no plan at this stage.

Twenty-first Century: When you mentioned in the prospectus that you have raised your gross margin to 40% in two years compared to 32.5% in 2008 and 38.2% in the first half of this year, are you aggressive?

Xu Zhihua: In the premise of fluctuations in raw material prices is unlikely to be too big, to improve the gross margin appears to be somewhat difficult, but the company gross margin in the first half of this year has reached 38.2%, compared with last year, a 6 percentage point increase, the figure It is not too far away from 40%, so I think it is not difficult to reach 40% in two years.

The company's strategy is to provide more products with higher margins, such as NBA signature basketball shoes, sales volume, will be able to enhance the overall gross profit margin. In addition, the company will also increase the price of distributors' distribution products, but the price of the products on the market will not change because we will also provide more support to them while helping them to increase their sales volume , To ensure the distributor's overall profit.

Shop plan

"21st Century": the company today, next two years the shop plan? In the sales model, do you maintain the retail rights to distributors? How do you think of China's sports brand consumer market and industry prospects in the next few years?

Xu Zhihua: Now, next year is expected to open 1,000 new stores. We open retail rights to our distributors because they give distributors more flexibility, distributors have control over their own channels, and the overall effect is to give us more flexibility in inventory control.

China's sports brand has a vast consumer market and a high-speed development in the future. However, the sports brand industry is a sunrise industry. However, when the single product is bigger, it can be said that it has entered the Warring States Period from the Spring and Autumn Period and the competition among high-quality brands in the future will intensify.