Lining Nearly 900 Million Yuan Of Accounts Receivable Will Be Allocated Capacity To Be Questioned.

The current state of the Li Ning Co has made management difficult, but what is even more frightening is that the worst is yet to come.

In October 19th, CLSA said in its research report that Lining had 886 million yuan receivables to be provisioning in the second half of the year, which would affect Li Ning Co's annual profits and questioned the poor quality of Li Ning Co's distribution management.

At the same time, give Lining 3.6 Hong Kong dollars / share target price.

In October 19th, Lining closed at HK $4.5 / share.

If Lyon forecast accurately, Lining still has a 20% decline.

900 million yuan reduction or Lining's annual loss

Since July 2012, Li Ning Co has undergone a series of adjustments.

We need to replace senior executives, develop new marketing plans, introduce new partners, and focus more on front-line brand areas.

But judging from stock prices, the market does not recognize Lining's series of adjustments.

In July 5th, on the day of Lining's return, Lining closed at HK $5.03 per share.

In October 19th, Lining fell to HK $4.5 per share.

The analysis of CLSA may represent some market participants' views.

CLSA believes that although Lining is the first exercise unit to reduce inventory, it does not mean that it can become the first enterprise to solve inventory problems.

Lyon's reason is: Lining's distribution network and distribution structure are more than the same industry, and the quality of distribution management is also poor.

The mid 2012 report shows that as of June 30th, the amount of accounts receivable from Li Ning Co 91 days to 180 days increased by 71% to 886 million yuan compared with the end of 2011. If part of the accounts receivable was not recovered at the end of September, the account period would change from "90 days to 180 days" to "180 days to 270 days". This account will become long-term receivables and may be provisioning in the second half of the year.

Data show that in the first half of 2012, Li Ning Co's revenue was 3 billion 880 million yuan, and its net profit attributable to shareholders was 44 million yuan.

It is conceivable that the provision of 900 million yuan accounts receivable will impact on Lining's annual performance.

Guotai Junan believes that this impact may lead to Lining's annual performance loss.

In their research report, they pointed out that they were concerned about the deteriorating financial situation of the company (Lining).

In addition, he expressed disappointment that the profitability of the company continued to deteriorate.

"The recent investigation in Shenzhen by the agency shows that Li Ning Co has a serious backlog of inventory and is still in the process of inventory repurchase with dealers. There will be more aggressive inventory management in the second half of this year.

This signal undoubtedly indicates that Lining will bear more financial costs in the future and aggravate the deterioration of the annual performance.

The motives for changing the stock with the extraordinary China were questioned.

Lining's confidence in the enterprise was also criticized at the same time when he questioned the inventory strategy.

In October 17th, Lining announced that Victory Mind and Dragon City sold 266 million 374 thousand shares of Li Ning Co to China, accounting for 25.23% of the total issued share capital of the company.

Li Ning Co told Tencent finance that the equity swap deal is a commercial decision between Lining himself and the extraordinary China. There has been no significant change in Li Ning Co's direction and future business policies and strategies.

After the completion of the paction, the shareholding relationship between the two companies and Lining remained close, and all of Lining's duties in the Li Ning Co and the extraordinary China remained unchanged, which indicated that he would not only reduce his investment in Li Ning Co, but also help the two listed companies to achieve synergy.

But CLSA obviously disagreed with Li Ning Co's explanation.

They believe that Lining's pfer of shares to China is equivalent to reducing shares of the company from the current level of 25% to 18%-20%.

Lining's reduction in the face of challenges in the industry shows that the company's business has not improved. His personal commitment to increase shares will not be fulfilled.

Based on the above factors, in October 19th, Guotai Junan set the target price of Lining to HK $3.92 / share, compared with the closing price in October 19th, there was still a 12.89% drop in space.

CLSA's assessment is even more pessimistic. They set a target price of HK $3.6 / share, which means they think Lining has a 20% drop.