Wangfujing plans to convert shares to absorb and merge shoushang shares
On the evening of January 18, Wangfujing and shoushang both announced that Wangfujing is planning to exchange shares to absorb shoushang shares by issuing a shares to all shareholders of shoushang shares, and issue a shares to raise supporting funds. The merger is expected to constitute a major asset restructuring, as well as related party transactions. The shares of the two companies will be suspended from the opening of the market on Monday, January 18, 2021. The suspension is expected to last no more than 10 trading days.
Wangfujing and shoushang are both old department stores in Beijing, with highly similar formats.
In 2020, affected by the epidemic, the performance of traditional retail business is low. Financial information shows that in the first three quarters of 2020, Wangfujing achieved an operating revenue of 5.632 billion yuan, a year-on-year decrease of 70.97%; its net profit was 212 million yuan, a year-on-year decrease of 74.96%. In the same period, shoushang realized an operating income of 21.8 yuan, a year-on-year decrease of 70.08%; net profit loss of 83.8817 million yuan, a year-on-year decrease of 128.18%.
Prior to that, on December 7, 2020, shoushang announced the early termination of the lease agreement of new Yansha Golden Street shopping plaza. On the one hand, the new Yansha Golden Street shopping plaza is in continuous loss; on the other hand, it is affected by the overall transformation and upgrading of Wangfujing Commercial Street. The company also said that the operating revenue of the new Yansha Golden Street shopping mall accounts for a small proportion of the company’s operating revenue, and the closure will not have a significant impact on the company’s operation. Although the early termination of the lease agreement will increase the company’s current losses, it will help to improve the company’s overall profitability in the long run.
The controlling shareholders of the two listed companies are the same as head travel group, and the actual controllers are Beijing SASAC. In February 2018, the first travel group promised to propose solutions within three years and completely solve the competition within five years. At present, the merger is the solution proposed by the first travel group.
Wangfujing’s share price rose nearly five times in two and a half months
In 2020, in addition to the traditional chain retail business, Wangfujing will also start to arrange tax-free business.
On the evening of June 9, 2020, Wangfujing announced that the company was granted the duty-free business qualification by the Ministry of finance. Wangfujing has become the eighth enterprise with tax-free license in China. Before that, the seven enterprises were Zhongmian group, RISHANG tax-free bank, Hainan tax-free bank, Zhuhai tax-free bank, Shenzhen tax-free bank, China export service tax-free bank and overseas Chinese tax-free bank.
Due to the scarcity of tax-free license resources, as early as before the announcement, Wangfujing’s share price soared for a month and a half because of the rumors that it won the tax-free license. After the news was made public, on June 10, 2020, Wangfujing still opened at the limit price, and the stock price continued to rise after the fourth board. As a matter of fact, since April 27, the trading volume of Wangfujing has continued to increase sharply, and the stock price has risen sharply continuously. By the end of July 9, the stock price has reached as high as 79.19 yuan / share, and the total market value once exceeded 61 billion yuan. In two and a half months, the stock price of Wangfujing has risen nearly five times.
However, in the following six months, the stock price of Wangfujing fell all the way. As of the latest closing day on January 18, the stock price of Wangfujing closed at 31.95 yuan / share, which was nearly 60% lower than the highest share price. The current total market value is 24.8 billion yuan.
Wangfujing’s first tax free project landed in Hainan
Tax free business on the island
After getting the tax-free license for more than half a year, Wangfujing will set up its first tax-free project in Hainan.
On the evening of January 15, Wangfujing announced that on January 15, 2021, the company signed an investment cooperation agreement with Hainan Rubber Co., Ltd. to invest in the establishment of duty-free business companies and daily duty-free business companies, respectively, for the development and operation of duty-free items and daily duty-free items in Hainan Province, and to carry out duty-free business management.
Among them, the registered capital of duty-free goods company is 100 million yuan, Wangfujing 60 million yuan and Hainan rubber 40 million yuan; the registered capital of duty-free goods company is 100 million yuan, Wangfujing 40 million yuan and Hainan rubber 60 million yuan.
In recent years, with the continuous development of China’s market economy and tax-free policies, especially the further liberalization of tax-free policies in Hainan Island, the tax-free market in Hainan has great development potential, the announcement said. The joint venture established by the company and Hainan Rubber Co., Ltd. is in line with the company’s strategic development direction. It helps to combine Wangfujing’s professional advantages with Hainan rubber’s local administrative advantages and resource advantages, and accelerate the development of the company’s tax-free business. This investment uses the company’s own funds, which will not have a significant impact on the company’s cash flow this year, and will not damage the interests of the company, its shareholders, especially small and medium-sized shareholders.
According to the information disclosed by Hainan Department of Commerce in 2020, the pattern of duty-free shopping in Hainan is mainly composed of three types of businesses: duty-free consumer goods, departure tax rebate and duty-free outlying islands. Recently announced in Hainan Island to open new duty-free shops in China free group, Hainan Tourism Investment Development Co., Ltd., China overseas personnel service Co., Ltd., Hainan Development Holding Co., Ltd., Shenzhen state-owned duty-free goods (Group) Co., Ltd., five companies are focusing on duty-free business in outlying islands. This time, Wangfujing chose to cut into the duty-free business of daily consumer goods.
“It can be seen that Wangfujing’s choice of duty-free (i.e. duty-free for daily consumer goods) on the island this time has far-reaching considerations.” Zhou Mingqi, founder of Jingjian think tank, said that although the tax-free market of Hainan Islands is “attractive”, the competition is also very fierce. Many tax-free enterprises, such as China Export & service and Shenzhen free, as well as a large number of “non industry capital” who do not hold tax-free licenses, are also eyeing this field. “More importantly, tax exemption on the island seems to be closer to Wangfujing’s traditional business industry than tax exemption on outlying islands, and can make full use of Wangfujing’s resources and experience advantages in real business operation for many years.”
According to another analysis, Wangfujing chose to cooperate with Hainan rubber because of its state-owned background and local resource advantages. According to the public information, the actual controller of Hainan rubber is SASAC of Hainan Province, and Hainan Nongken Investment Holding Group Co., Ltd. is the controlling shareholder of Hainan rubber, holding 64.35% of its shares. In December 2020, Haiken group opened three imported consumer goods stores in Haikou, covering nearly 2000 kinds of imported consumer goods, including household products, washing and care products, beauty products, imported leisure food, drinks, imported dairy products, etc. Haiken group is expected to open 50 stores in Haikou and 100 stores in the whole island step by step in 2021, laying the foundation for the layout of imported duty-free consumer goods projects, and is expected to form a joint force with Wangfujing.
It is worth mentioning that, benefiting from the cooperation news, on January 18, the trading limit of Hainan rubber opened. As of the closing, the trading limit closed more than 146000 orders, and the share price closed at 5.24 yuan / share, with a total market value of 22.4 billion yuan.