Waiting For 22 Months Later, The Dream Of Listing Is Finally Lost. Why Is IPO Dressed In Carmen?

After waiting for 22 months, Beijing's Carmen apparel Limited by Share Ltd (hereinafter referred to as "Carmen clothing") went public. Recently, reporters learned that Carmen clothing became the first IPO company in 2020.

It is reported that in March 14, 2018, Carmen apparel submitted the initial public offering prospectus to the SFC, followed by a pre update disclosure in October 31, 2018. In September 14, 2018, Carmen apparel received the first feedback from the SFC. In the meeting of the securities and Futures Commission, the SFC questioned various kinds of costumes. It is reported that Carmen clothing is a high-end children's clothing business, mainly engaged in research and development of children's clothing, supply chain management, operation and promotion, direct sales and affiliate sales and other core businesses.

It is understood that the brand currently operated by Carmen clothing includes three categories, namely, its own brand, authorized business brand, and international retail agency brand, with a total of 24 brands. What makes the market sob is that in the 24 brands, the private brand of Carmen clothing is only "water boy". And the Chinese Commercial Daily reporter looked at the prospectus of Carmen's clothing, and found that the "water boy" brand revenue is facing the risk of stagnation or even decline.

Data show that in the first half year of the Carmen clothing (2015-2018 months' first half year), private brands achieved 195 million yuan, 155 million yuan, 159 million yuan and 87 million 202 thousand and 400 yuan respectively, accounting for 50.55%, 38.67%, 28.99% and 28.99% of the main business income respectively, showing a gradual decline.

The authorized operating brand revenue and gross profit ratio rose sharply. During the reporting period, two indicators were 38 million 420 thousand and 900 yuan and 9.97%, 97 million 555 thousand and 800 yuan and 24.31%, 233 million yuan and 42.41%, 158 million yuan and 48.06% respectively. The above two indicators of international retail agency brand are 152 million yuan and 39.48%, 149 million yuan and 37.02%, 157 million yuan and 28.60%, 83 million 946 thousand yuan and 25.48% respectively.

In this regard, the trial Commission asked Carmen clothing to explain the reason why its authorized business brand accounted for an increase in annual operating income and the proportion of private brand income decreased year by year. It is undeniable that Carman apparel is more and more dependent on its authorized operation of hush puppet and Haggis, as well as 21 international retail agency brands. However, its licensing authorization with the Haggis brand will expire in December 31, 2020, and the licensing license of hush's brand will also arrive in December 31, 2022. Besides, Carmen apparel has not signed a long-term agreement with the 21 international retail agency brands.

A fund investor who declined to be named told the China Commercial Daily reporter that the growth of Carman's clothing revenue was over reliance on authorized brand and agent brand. At the same time, the company has not yet reached a long-term cooperation agreement, and its future revenue is full of uncertainty. In addition, the profitability of Carman's own brand has been declining, and its competitiveness in the domestic market is not strong enough.

China Daily News reporter noted that Carmen clothing also received a warning letter from the SFC. In July 2019, the SFC found that in the process of applying for listing, the SFC had asked for money to pay bills or purchases, use personal accounts to pay expenses or expenses, and not fully offset the unrealized profits of internal transactions. The SFC asked it to explain the reasonableness of the sustained growth of revenues, especially the reasons for the increasing annual revenue of e-commerce providers. Now, judging from the results, the answer of Carman's dress is not satisfactory to the SFC.

Compared with the same industry, the stock value of Carmen apparel is increasing. Prospectus shows that in the first half of 2015-2018 years, the inventory value of the company was 191 million yuan, 216 million yuan, 247 million yuan and 216 million yuan, respectively, accounting for about 55% of the current assets ratio, far higher than the 30% of the same industry, and the inventory risk is relatively high. The company also has the suspicion of increasing profits by reducing inventory risk.

The fund investors said that the main reason for the fact that Carman's clothing had not passed the listing examination was that the business risk was large, and there was suspicion of illegal operation.

The Chinese Commercial Daily reporter sent an interview letter to Carmen's clothing on the question of whether the listing will be continued or not, but as of press release, the company has not yet replied.

There is no denying that at present, children's clothing market is regarded as the last blue ocean of garment industry. Children's clothing brand, sports brand, leisure brand and other people are fighting for it. Consulting firm Ou Rui International predicted that in the 2019-2023 years, the average annual growth rate of children's wear market in China was 12.5%, higher than that of men's clothing, women's wear and sportswear in the same period.

Haitong Securities analyst Liang Xiye believes that the size of children's clothing industry is expected to maintain high growth. Liang Xi said that in the future, children's clothing enterprises should take brand upgrading as an important driving force for expansion. With the rich brand operation experience, supply chain and channel advantages, high-quality children's clothing enterprises can superimpose the trend of brand upgrading of children's clothing so as to maintain steady growth in performance.