PEAK Sports Completes Its Privatization From The Hong Kong Stock Exchange Delisting

The stock code is 01968.HK.

Sports from the Hong Kong Stock Exchange delisting, marking the 3 months of PEAK sports privatization draw a successful conclusion.

After two failed IPO listing, PEAK listed on the Hong Kong stock market in 2009. Because "investment value has been undervalued for a long time, it is difficult for the company to make effective use of the capital platform, thereby affecting the company's business development". PEAK has begun the privatization process.

After the privatization of the group's future development, PEAK sports has been laid out. "Completing privatization is only the first step, PEAK from a single sports equipment."

The road to upgrading sports industry group has just begun.

After the delisting, PEAK sports next step in capital

What will the general plan? For this reason, the industry speculating that the impact of A shares will be the most likely way out for PEAK sports, but the road to return to A shares is not smooth.

01

It is understood that in September 2009, PEAK sports public offering was 22 times oversubscribed, priced at HK $4.1 in the range of the prospectus, and the net proceeds amounted to HK $1 billion 585 million.

Before the listing of Hong Kong stocks, PEAK sports went through two IPO failures, and in the three years, three venture investments were implemented to achieve the financing plan.

Statistics show that since 2007, Sequoia Capital Invested in PEAK and gained nearly 8% stake.

The following year, PEAK sports and Jiayin international, Shenzhen innovation investment and other cooperation to achieve the two raise funds.

In April 2009, Sequoia Capital, Jiayin international and Lenovo invested three private equity investment institutions to invest nearly $60 million to PEAK sports, completing the last round of financing before PEAK listed.

But since its listing in September 2009, PEAK's performance has been unsatisfactory, with sharp fluctuations in operating income, net profit and number of stores.

Since 2012, with the economic weakness at home and abroad, the annual net profit of PEAK sports group has only been maintained at the range of 200 million -4 billion yuan, and a large number of stores have been started to maintain cost operation.

Although turnover increased to 3 billion 100 million yuan in 2015, it still failed to achieve sustained development.

According to PEAK's mid-term performance report this year, as of July 30th, PEAK Sports Group's operating income fell 6% to 1 billion 298 million yuan, down 5.6% to 494 million yuan in the same period last year, and net profit attributable to shareholders decreased 3.8% to 169 million yuan.

And for a long time, PEAK sports share liquidity has been at a low level.

Although the market value of PEAK sports is about 6 billion 100 million Hong Kong dollars, it is still in the reciprocal position in the mainland sports apparel and Hong Kong stock enterprises.

Most domestic sporting goods companies are listed in Hong Kong, including Lining, Anta, 361 degree, XTEP and so on.

From this year's China Daily, Anta has a lead of 6 billion 142 million yuan in revenue, while Lining's revenue is 3 billion 596 million yuan, 361 yuan is 2 billion 556 million yuan, XTEP is 2 billion 535 million yuan, PEAK is 1 billion 298 million yuan.

Compared with the increase in revenue, Anta's 20.2% is also far ahead, while other brands have achieved different ranges of growth. PEAK alone has fallen by 5.96%.

Reporters found that as of now, the A shares listed by the precious birds with frequent capital operation, has been actively layout big sports, and has gained a higher valuation, price earnings ratio has reached 76.32 times, which is far beyond the PEAK of the Hong Kong stock exchange, the latter's price earnings ratio is only 13.85 times.

Why did PEAK take the lead in privatization in the sports industry? For this reason, PEAK said that PEAK was listed in Hongkong 7 years ago, but after September 2009, the performance of the company's share price was not satisfactory.

In stark contrast, when the document on speeding up the development of sports industry was promulgated, the sports industry ushered in the golden age. Domestic sports concept stocks and even pan sports concept stocks were highly praised by investors. The sports industry was regarded as a blue ocean of capital market.

By contrast, the value of investment in PEAK, which has been ploughing for many years in the sports industry, has been undervalued for a long time. It is difficult for the company to make effective use of the capital platform, thereby affecting the development of the company's business.

Therefore, under the proposal of PEAK's largest shareholder Xu family, PEAK implemented the privatization plan.

Get many capital giants to build a "sports industry ecosystem".

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Privatization from the Hongkong market is not an easy task.

In addition to a series of procedures such as obtaining the majority vote of the stockholders and the approval of the court of the company's registration, the recognition of the capital magnates will become crucial.

The PEAK sports privatization project investment coordinator Doug capital believes that PEAK is a cultural and Sports Industry Industrial Company, is a scarce concept; in addition, PEAK's outstanding performance in overseas markets has given investors more room for imagination; plus PEAK's extension in sports industry (including sports and services) has high potential, and the future pformation space is relatively large.

PEAK sports is a very scarce target of sports industry.

Because of this, in the process of PEAK sports privatization, capital giants have taken the initiative to find PEAK and are willing to participate in privatization investment.

Doug capital joint Everbright capital, Qianhai parent fund, Minsheng Bank, Guoxin Securities, Guangfa Securities, Southwest Securities and so on, become the top stock of PEAK sports shareholders list. These giants with strong financial strength, service capabilities and industrial resources will inject new impetus into PEAK.

In fact, these capital giants will not only provide resources and services for the future listing of PEAK sports, but also unite PEAK sports to set up industrial funds and investment buyout funds focused on sports industry, and jointly build "PEAK sports industry ecosystem".

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As early as 7 months ago, PEAK Sports China CEO Xu Zhihua described the grand blueprint for building PEAK sports industry ecosystem.

At a news conference in July 17th, he made it clear that he would set foot in the fields of sports IP competition, sports training, sports big data, sports information and social networking, and build PEAK sports industry ecosystem.

PEAK's confidence comes from many years of internationalization and careful layout. At present, PEAK sports is already the highest selling local sports brand overseas, and its products are sold to more than 90 countries and regions.

In 2015, PEAK group's overseas sales reached 670 million yuan, accounting for 21.6% of the total turnover.

In addition, PEAK sports has maintained good cooperative relations with top international institutions such as FIBA, Olympic Committee, NBA, WTA and so on through many years of accumulated industry. It has abundant international resources, and has signed 11 NBA players such as Howard and Parke, and 10 national basketball associations such as New Zealand, Ukraine, 12 countries, Serbia, Germany and Australia, as well as many overseas basketball clubs such as Makabi in the Champions League, Frankfurt team in the UEFA Cup and so on.

After privatization, PEAK sports will implement multi brand strategy and improve the strategic layout of sports equipment industry internationalization.

Xu Zhihua said, "in the future, through the acquisition and investment of excellent sports equipment companies in the international sports industry, we will implement the multi brand strategy and gradually complete the strategic layout of multi class and multi-level equipment in basketball, soccer, tennis, marathon and other mass sports.

At the same time, PEAK will make full use of its existing capital partners and sports partners' resources and resources to build PEAK sports industry ecosystem. "

"Our goal is to enable PEAK to develop from an excellent international sports equipment supplier to an international sports industry group."

Xu Zhihua said.

Return to the A share market? The future road is hard to say.

03

PEAK sports privatization has been completed, but whether the group will return to A shares in the future has become the focus of attention.

Financial expert analysis pointed out that the characteristics of the Hong Kong stock market are to focus on major stocks, and small and medium capitalization stocks need great difficulty in changing the undervaluation of the stock market.

If PEAK sports is not privatized, its share price may be cheaper in the future.

Therefore, privatization has become an inevitable choice for enterprises to pursue the high valuation of the market.

However, for the current situation of A share market in China, there are two ways for PEAK sports to return to IPO: IPO and backdoor listing.

Regarding this, Ren Huitao, member of the Fujian Sports Industry Research Center, pointed out that the difficulty of PEAK's sports Return lies in the "dilemma" of the way of return.

"The first difficulty is that if you enter A shares in IPO mode, it may take a lot of time."

Ren Huitao analyzed that, at present, the domestic market "IPO barrier lake" phenomenon is serious, PEAK sports not only needs to complete the required restructuring, financial and other listed declaration scheme, but also needs to queue up in the "listing" auditing army at the front of the SFC.

According to the data released by the SFC, as of July 28th this year, the SFC accepted 868 IPO enterprises in 2016, of which 113 had passed, and 755 had not passed.

In 2015, only 220 enterprises in the country completed the IPO.

"That is to say, even if the process of PEAK's privatization reform is successful, the official listing of PEAK sports may take two or three years."

Ren Huitao said.

"The second difficulty is that if you choose" backdoor listing ", it will be very expensive.

Ren Huitao pointed out that with the suspension of registration system, the demand for listing stocks, Hong Kong stocks and emerging enterprises has become more and more popular. The value of shell assets of A share listed companies has risen sharply. At the same time, one billion of the "shell fee" seems to have become an unbearable burden for PEAK sports, which has already paid a lot of money in the privatization process. At the same time, the operation of backdoor listing is very difficult.

In addition, Ren Huitao pointed out in particular, what is the impact of capitalization on the internationalization of PEAK sports?

"Brand internationalization is an enterprise strategy of PEAK sports. Hong Kong shares are listed or returned to A shares. The funds raised are basically for PEAK products to get out of China and serve the world."

At present, PEAK sports not only sponsors basketball matches such as NBA and CBA, but also sponsors many national Olympic teams and athletes such as Zimbabwe, Ukraine, New Zealand, Cyprus and so on. At the same time, brand marketing and marketing are also launched in nearly 100 countries around the world. These business results require sufficient capital and human resources to achieve them.

So, in the next two or three years, how to balance the two major strategies, especially in the process of capitalization, will ensure the sustained growth and growth of PEAK brand.