Inner Mongolia Erdos Resources Co., Ltd. (600295. SH, hereinafter referred to as "Ordos") recently spent nearly 2.7 billion to buy two buildings in the center of Shanghai.
According to the announcement, Ordos plans to purchase the office building and 210 underground parking spaces in the Suhewan section of Jing'an District, Shanghai with its holding subsidiary, Electric Power Metallurgical Group, with a total property area of 45,400 square meters.
Ordos invested about 1.345 billion yuan to purchase the 1-14th floor of the No. 3 and No. 4 properties and 210 underground parking spaces, and the Electric Metallurgical Group invested about 1.329 billion yuan to buy the 15-23rd floor of the No. 3 property, with a total transaction price of 2.67 billion yuan.
This target was previously jointly held by He Chaoqiong, the daughter of the Macau gambling king, and China Resources Land.
The target seller is Shanghai Huahe Real Estate Development Co., Ltd. The Tianyancha APP shows that Huahe Real Estate is held 50% by Shanghai Tongxin Investment Co., Ltd. and China Resources Land (Shanghai) Co., Ltd., and Shanghai Tongxinyou is held by He Chaoqiong. Have.
For this transaction, Ordos said that Shanghai is China's fashion window and fashion capital to the world, with a complete fashion industry chain.
Purchasing properties is to provide a business environment with an international perspective for the company's brand development, and to provide a long-term stable and superior environment for the company's product display, new product release, and new retail platform.
Started Cashmere Transformation Diversified Group
In 1979, Yimeng Cashmere Sweater Factory was established. This factory is the predecessor of Ordos and the first investment attraction project in Inner Mongolia after the reform and opening up.
In 1993, Yimeng Cashmere Sweater Factory officially changed its name to Inner Mongolia Erdos Cashmere Sweater Factory.
Two years later, after the share reform, Ordos’ B-share listing raised US$48.4 million, and it acquired four cashmere factories under the group.
With the capital, the cashmere industry in Ordos has been further developed.
Ordos, which started cashmere, was listed on the A-share market in 2001 and was already one of the largest cashmere manufacturers in China at that time.
But if only as a clothing company, Ordos has its inherent limitations.
70% of the world's cashmere is produced in my country, and the Ordos area is one of the areas with the most cashmere production and the best quality in China.
Cashmere is known as "soft gold" in the international market because of its scarcity, warmth and comfort characteristics, but the production of "soft gold" is limited. In addition, cashmere was only used in winter clothing for a long time. Limited to high prices and a small consumer audience, these have limited the development of Ordos cashmere and clothing sectors to a certain extent.
After realizing the "ceiling", Erdos began to try to diversify.
Coal mines, electricity, ferrosilicon and other products have become Ordos' new business outside of cashmere.
In 2006, Erdos ferrosilicon revenue was 580 million yuan, accounting for about a quarter of the company's total revenue.
With the continuous production of new businesses, the business scale of Erdos ferrosilicon has grown rapidly and has gradually become the company's largest business.
Thanks to the successful diversification transformation, Erdos gradually broke through the bottleneck of cashmere business, and the company's overall revenue and profit continued to grow.
After more than 20 years, Erdos's largest business segment is not clothing.
According to the 2021 annual report of Erdos, the company achieved a total operating income of 36.47 billion yuan during the period, a year-on-year increase of 57.61%, and a net profit attributable to the parent of 6.091 billion yuan, a year-on-year increase of 298.58%.
The reporter noticed that today's clothing business accounts for only 10% of the overall Erdos.
Specifically, the operating income of the clothing sector last year was 3.68 billion yuan, while other businesses, such as ferrosilicon revenue was 12.77 billion yuan, and the PVC resin business revenue was 8.217 billion yuan.
Due to the surge in performance, Erdos has also been sought after in the capital market. Last year, the company's stock price rose from around 10 yuan at the beginning of the year to a maximum of 45.57 yuan in September, the largest increase since its listing.
However, there has been a callback since then. As of today's close, Erdos's share price closed at 27.75 yuan.
Market Expansion Moves South
In the past 20 years, my country's garment industry has experienced a stage from rapid development to slow growth.
An industry insider believes that China's apparel industry has always been a competition in the Red Sea, and new competitors will come in every year.
As a result, companies began to seek other business development.
In addition to Ordos, Shanshan (600884.SH) and Youngor (600177.SH) are also typical representatives of the diversified layout of clothing companies.
Shanshan Co., Ltd. is the first listed company in my country's clothing industry. After realizing the reality of the explosive growth of the clothing industry in 1998, chairman Zheng Yonggang led the company to deploy new energy.
In 1999, Youngor was out of control after investing in the financial industry for the first time, and the investment income is still its biggest profit source.
"If it only relies on the clothing business, these companies will not develop to the scale of tens of billions." The above-mentioned industry source said.
However, the aforementioned companies have expressed in recent years that they will not give up their main business, or even return to their own business.
Youngor Chairman Li Rucheng has previously announced that Youngor will undergo a business transformation and will create another Youngor.
Erdos has also rebuilt its brand under the leadership of Chairman Wang Zhen over the years.
Wang Zhen's father is Wang Xianglin, the founder of Ordos.
Wang Zhen studied in the UK in his early years. In 2006, Wang Zhen joined the Erdos Group and officially became the company's successor nine years later.
Under her leadership, Erdos launched a multi-brand strategy.
At present, the company has ERDOS, Erdos 1980, BLUE ERDOS and other brands.
An insider of the company told reporters that compared with other apparel companies, Erdos has the advantage of mastering the upstream raw materials and establishing a complete industrial chain.
In terms of cashmere, Ordos has established the whole process layout of cashmere raw material procurement, carding, dyeing, spinning, weaving, and finished product sales.
At present, in the entire business of Erdos, the proportion of fashion apparel sector is not large, but from the decision of the company's top management, Erdos has not made much effort in marketing and strategy.
A series of measures have allowed the company's clothing sector to break through the bottleneck period of the previous years, and revenue has begun to show a slight growth trend. From 2015 to 2020, the company's clothing revenue has an average growth rate of 6%.
The company's clothing gross profit margin has also grown rapidly, from about 40% before to 53% in 2020.
Many years later, Wang Xianglin recalled that he went to Japan for inspection in 1984 and recognized at a glance that it was a cashmere sweater made by himself in front of the cashmere sweater counter in a shopping mall. Even hundreds of times. After being shocked, I made up my mind to create my own brand, and this was the birth of 'Ordos'."
The aforementioned person said that for a clothing company, it is beneficial to build a brand, whether it is to increase the premium or to plan for a long time. If there is no brand, it will inevitably affect the gross profit.
Take Bank of China Cashmere (000982.SZ) as an example. It is also a company mainly focusing on cashmere products. The company's main business model is exporting to foreign countries.
In 2020, the company's textile business gross profit margin is 15%, much lower than Ordos' 53%.
According to the "2021-2027 China Women's Wear Industry Development Dynamic Analysis and Development Prospect Forecast Report" released by Zhiyan Consulting, the women's clothing market occupies half of China's clothing industry, and the increasingly personalized demand makes the women's clothing market more and more fragmented.
Even with a single focus on cashmere brands, there is a situation where there are many brands ranging from international brands Maxmara, Loro Piana, Falconeri to local brand ERDOS and so on.