The tide of mergers and acquisitions in the home store has reopened.
On July 18, Red Star Macalline, the largest home furnishing chain store in China, announced that it would strategically invest in Ginza Home Furnishing with an investment scale of 348 million yuan. After the completion of the transaction, Red Star Macalline and Lushang Group will jointly control Ginza Household with a 46.5% shareholding ratio.
1
Is it intended to "snipe" the actual home?
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According to the agreement, Red Star Macalline will increase its capital and acquire equity by way of capital increase, including RMB 20 million to Ginza Home Furnishing, and transfer 36.1% of the shares held by Shandong Commercial Group Co., Ltd. to Shandong Ginza at RMB 256 million and RMB 72 million respectively. Mall Co., Ltd. held 10.2% of the shares, and finally obtained 46.5% of the equity of Ginza Home Furnishings.
After the transaction between the two parties is completed, Red Star Macalline and Lushang Group will jointly control Ginza Home with a 46.5% shareholding ratio.
It is worth noting that this strategic cooperation is also an important step in the current "mixed reform" of state-owned enterprises.
Compared with the "mixed reform", the home furnishing industry is more concerned about the impact of this cooperation on the competitive landscape of home furnishing stores in Shandong.
Data show that as of June 30, 2019, Red Star Macalline has opened 31 home shopping malls in Shandong (27 Red Star Macalline malls and four Xingyijia malls), involving 15 cities. As one of the three pillars of the retail industry of Shandong Provincial Commercial Group, Ginza Home Furnishing currently has 12 stores in Shandong, with an annual operating scale of more than 3 billion yuan, covering 8 cities including Jinan, Heze, Linyi, and Weihai.
This also means that after the completion of this transaction, Red Star Macalline will have more than 40 terminal stores in Shandong. According to an earlier article by First Furniture.com, "One Picture to Understand the National Layout of Home Furnishing Stores," Horse Riding "Enters the Second Half", the current Red Star Macalline and Home are fiercely competitive in Shandong. In terms of the number of stores, as of the third quarter of 2018, the number of stores opened in Shandong actually exceeded 20, the highest among all provinces.
After the completion of this transaction, the competition between the two parties may change significantly.
2
Store concentration continues to increase
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In response to this strategic cooperation, the parties all expressed concern about channel adjustment.
Che Jianxin, chairman of Red Star Macalline, said that Ginza Home Furnishing is the local brand with the highest market share in Shandong Province. The future of home furnishing is online and offline integration. I believe this time the strategic cooperation with Red Star Macalline and the previous Red Star Macalline The strategic cooperation between Long and Ali will greatly help their development.
In the eyes of professionals, this cooperation can be seen as a major turning point in the development of domestic home furnishing stores.
Zhou Haichen, deputy general manager of Shenwan Hongyuan Securities Research Institute, pointed out that Red Star Macalline, Lushang Group and Ginza Home Furnishing have successfully held hands, providing a new idea for future expansion and integration of the home retail industry.
At present, domestic home furnishing chain stores have entered the stage of stock competition, and the industry will continue to diversify and integrate. Through research on overseas, the home furnishing industry has developed to a certain stage and will inevitably follow such a path. Therefore, this strategic investment will be another milestone in the domestic home furnishing chain stores towards centralized integration.
According to analysis by Huachuang Securities, China and the United States are the leading home furnishing benchmarks. The two largest home furnishing stores in the United States, Home Depot and Lowe, account for 43% of the total market share, while the two largest home furnishing businesses in China account for 6.37% of the market share. The room for improvement is vast.
Southwest Securities previously analyzed that Red Star Macalline currently has sufficient preparatory shopping malls, of which there are still 33 self-operated malls, and there are still 357 managed malls that have yet to be opened and have obtained land certificates. It will maintain a speed of around 7 per year and commission 40 to 50 new stores per year.
3
Expansion of home stores will accelerate
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In fact, in the past 10 years, leading home stores have continued to open new stores, and mergers have been more frequent. According to incomplete statistics:
In August 2010, Ouyada Furniture acquired Shenyang Baili Furniture;
October 2010: Ouyada Furniture acquired Hangzhou Tianyi Furniture Plaza;
At the beginning of 2013, Actually Home acquired three stores in Dongfang Jiayuan Beijing;
In July 2013, South China City acquired Hundred Years Home Furnishing;
In October 2013, Actual Home and Wanjia Home announced a strategic cooperation to expand the Northwest market;
In February 2014, Red Star Macalline successfully acquired Jisheng Weibang, and the markets in East China and Northeast were further expanded;
In September 2016, Juran Home and Jian'ai Home announced a strategic cooperation, and Juran Home successfully entered the South China market with this;
In October 2017, Actual Home and O'Kellon announced a strategic cooperation. At that time, Ou Kailong had more than 10 stores in Henan, including 6 in Zhengzhou. Actually, the home also successfully seized the Henan market.
Huachuang Securities analysis, in 2018, Macalline and the actual home stores in the third and fourth tier cities accounted for about 65%. Macalline's first-tier cities accounted for a relatively large number of store openings, at 6%, and actually at home, 4%. The homes in second-tier cities account for a relatively large proportion of 30%, and Macalline ’s 29% is slightly lower.
Looking at the number of stores according to regional distribution, Macalline has obvious advantages in the number of stores in East China. The number of stores in the Western Region and Central China, Beijing and Chongqing actually exceeds that of Macalline. The number of stores in other regions of the country is comparable, and competition is fierce.
Shen Wanhongyuan believes that Ali's actual shareholding in early 2018 is now its third largest shareholder. With the actual home landing in the capital market, the integration process of the upstream and downstream of the home furnishing industry chain will accelerate in the future.
According to the announcement of Red Star Macalline and Actual House, in 2018, Red Star Macalline's operating income was 14.24 billion yuan, with a net profit of 4.477 billion yuan; the new retail operating income was 8.369 billion yuan, and the net profit was 1.962 billion yuan.
In addition, as of March 31, 2019, Red Star Macalline operates 364 home building materials stores / industry streets in China.
In fact, with the intervention of capital and Internet giants, the big home industry is expected to enter a stage of accelerated integration, and the expansion of the share of home brand leaders and home store leaders will greatly accelerate.
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