Chapter 41 Chapter Eleven Extraordinary 2007 (2)

However, just looking at the financial report, accountants tend to think that this is not a good deal.As of the end of 2006, the net assets of Double Happiness Group were about 134 million yuan, the pre-tax profit of the year was 38.48 million yuan, the sales volume in 2006 was 269 million yuan, and the return on net assets was 16%. Yuan Zhiju was able to acquire 57.5% shares of Double Happiness. The chief financial officer of a sporting goods company, one of the competitors of "Li Ning", believes that: as a well-known brand that has already taken the No. 1 position, Double Happiness has a large stock, but how big the increase is is a problem. How much room does Double Happiness have for profit growth?If too much money is paid for the merger and acquisition, but the profit return is not large enough, it will easily become "making a wedding dress for others".

Is it worth it?Zhang Zhiyong, who has a financial background, is obviously good at calculating cost-benefit, but he believes that high payment is not a simple math problem.After the acquisition, he immediately expressed his satisfaction to the outside world in a high-profile manner: "Li Ning spent 305 million yuan for this, half of which bought the brand, and the other half was optimistic about the experience and maturity of the Double Happiness management team. I believe that through cooperation, we can Internationalize the table tennis event." Zhang Zhiyong is not looking at the expenditure, but the income: "In the sports consumption of Chinese people, the table tennis event ranks fourth. If Li Ning does not cooperate with Double Happiness, it will start again in the table tennis field , more difficult. In China, table tennis is the national sport, the favorite sport of Chinese people, and the best sustenance of local culture.” Zhang Zhiyong’s confidence is based on such a market forecast: table tennis has a large market in China Potential, the market capacity (including equipment, clothing and shoes) exceeds 3.5 billion yuan; it is expected that the annual growth rate of the table tennis market will remain at about 15% in the future.On this basis, Li Ning himself also expressed enough confidence in the acquisition. He believes that this move can "effectively strengthen the position of Li Ning Group in the fast-growing table tennis, badminton and other indoor sports product markets. It is expected that the 2008 Olympic Games will further stimulate the Chinese people's love for these two sports. This presents an excellent opportunity for the Group."In addition, DHS's Wang Liqin, Wang Hao, Ma Lin, Wang Nan, Xia Xuanze, Gong Ruina and other star players will all contribute to the Li-Ning brand.

Huang Yongwu, chairman of Double Happiness, joked that this move was one of the signs of Li Ning's "re-entering the city".Double Happiness's overseas market is relatively mature. Europe, Japan, Southeast Asia and the Americas are its traditional and stable markets. Overseas markets account for nearly 25% of its total sales, while the overseas market of "Li Ning" is relatively small and has yet to be developed. After the cooperation , "Li Ning" can strengthen its control over overseas and domestic first-tier markets. Like Nike's business model, Li Ning also intends to give Double Happiness sufficient independent management rights after the acquisition.Huang Yongwu, who has an income of 300 million yuan and "sweet wedding", is also glad that he has found a good buyer: "Double Happiness has been building a world-class brand for so many years. As a domestic brand, we are facing the Olympic Games. It is possible to fall behind, and if you fall behind, you will be beaten. Now Double Happiness wants to go its own way and truly build an international sports equipment brand." Obviously "Li Ning" will provide enough support for this. The known support includes that Li Ning will Provide 1,400 of its more than 4,000 stores as sales terminals for the Double Happiness brand.Before that, there were only about 700 sales points of Double Happiness.This move will double the number of Double Happiness terminals, and the sales volume is worth looking forward to.During the Olympic Games, Li Ning's flagship stores in six Olympic cities will sell Double Happiness products.According to the cooperation plan of the two parties, by the middle of 2008, Li Ning Company will launch a clear strategy of "Li Ning + Double Happiness" brand.After the Beijing Olympic Games, the two sides will have a five-year strategic plan.Huang Yongwu believes in the prospects of this cooperation, he told the media: "Double Happiness, like Li Ning, both want to build a world brand."

Even investment banks, which are good at calculating data, praised this merger more from the perspective of industry and market.After Li Ning Company announced the merger and acquisition, Morgan Stanley issued a report, maintaining the investment rating of "hold" for Li Ning Company, saying that the acquisition will help it expand its product portfolio, bring cross-selling opportunities to table tennis and footwear products, and Double Happiness is expected to benefit from Li Ning's strong market network and platform.Merrill Lynch maintains its "buy" rating on Li-Ning, believing that Li-Ning's acquisition of famous mainland brands will benefit its strategic development.

Zhang Zhiyong believes with great confidence that through cooperation, the table tennis event can be truly internationalized.Not long after the acquisition of Double Happiness, "Li Ning" launched four new professional badminton sports shoes with avant-garde design and a sense of technology. The prices are 599 yuan, 469 yuan, 399 yuan, and 299 yuan. The practice of "sweeping everything in one go" is obviously a prelude to preparing for a big fight in the table tennis and feather market.