Buying a red star Macalline or intending to increase the value of commercial real estate

The acquisition of JSWB by Red Star Macalline has caused many concerns in the market.

At present, Red Star Macalline has not announced the details of the transaction. Regarding the purchase price, Red Star Macalline said, "Because the two parties signed a confidentiality agreement, it is not convenient to disclose the specific details."

The industry insiders said that the current home industry is sluggish, and the scale of JSWB is relatively small, and the amount of the acquisition should not be very high.

In addition, the industry analysis, the development of Red Star Macalline has jumped out of the previous staking expansion ideas, after the completion of the acquisition, in addition to increasing the product line and improving the bargaining power of suppliers, you can also increase the value of commercial real estate with the improvement of operational capabilities.

In recent years, there have been a few cases of bankruptcy restructuring and mergers and acquisitions in the home industry. The scale effect of Red Star Macalline and JSWB will squeeze the living space of other home building materials channels, and the subsequent home industry competition will be concentrated among domestic brands.

“No direct relationship with listing”

For the acquisition, Red Star Macalline said that the home market is large, but the industry concentration needs to be improved. The home building materials circulation industry has stabilized in the first-tier cities, and the second- and third-tier markets are in the stage of scale expansion. "From the perspective of the entire home market, Red Star Macalline has huge room for growth, and the current expansion and development is in line with the current state of the industry."

Red Star Macalline emphasized that the acquisition and future listing of A shares are based on the long-term strategic development needs of the group. The acquisition is a normal behavior of the company's operations and is not directly related to the listing.

As we all know, the positioning of Red Star Macalline and JSWB is not the same. Red Star Macalline has 125 stores in more than 90 cities across the country, making it the largest single home shopping mall. And JSWB is positioned as a high-end, and the settled merchants are almost the first ladder brands in the home industry. In addition, JSWB has a slower expansion. When all the home chain expands, the opening speed of JSWB has not improved. The main stores are still distributed in Guangzhou (real estate), Shanghai (real estate) and other big cities.

For the "hands-on" of the two companies, the industry believes that from the perspective of JSWB, due to missed the opportunity of rapid expansion, coupled with the sinking of the positioning restrictions channel, it chose to follow the trend of industry integration; and from the Red Star Macalline In view of this, the high-end Jisheng Weibang has a complementary effect on its brand.

As the sales force of the home furnishing industry shifts from hard-wearing to soft-packing, through the acquisition of JSWB, the growth of sales of the future Red Star Macalline in the soft-packed segment has also become a concern. Red Star Macalline pointed out that as the current acquisition is still in the framework agreement stage, the specific acquisition details have not been fully implemented, but it is foreseeable that the overall strength of the company in the soft-packed part will gradually increase in the future.

According to Red Star Macalline, after the completion of the acquisition, it will use the brand influence and market reputation accumulated by JSWB, combined with its own channel construction and investment experience, to further promote the “double brand” strategy, but the details have not been disclosed.

Zhao Min, the founder of Zhengluo, told reporters that within three to five years, Red Star Macalline may take the “double brand” strategy, but it does not rule out the subsequent gradual dilution of Jisheng Weibang. “Gome and Yongle are like this.”

However, Xue Xinwen, general manager of Ruixin Zhicheng, said that it is most likely and logical for the two parties to share the property on commercial real estate. He said that once the acquisition is completed, Red Star Macalline needs to worry about how the goal will evolve into results.

Helps increase the value of commercial real estate

Although Red Star Macalline said that the acquisition is not directly related to the listing, but because the current Red Star Macalline is in the sprint listing stage, the impact of this merger on its listing has also triggered industry discussions. Zhao Min pointed out that through mergers and acquisitions, Red Star Macalline can expand its market share, enhance its position, or prepare for the next listing expansion.

Xue Yuwen told the reporter of "Daily Economic News" that if the Red Star Macalline is simply regarded as a distribution home operator, the two advantages brought by the acquisition: from the perspective of consumers, increase the influence of product lines and brands. From the supplier side, Red Star Macalline's ability to follow up on bargaining has also improved.

The value of this acquisition does not stop there. At the moment, Red Star Macalline is gradually shifting from focusing on the home industry to a strategy of paralleling home and commercial real estate. Zhang Huarong, CEO of Red Star Real Estate and vice chairman of Hongxing Commercial Real Estate, has publicly stated that by 2020, Red Star Macalline will hold 100 urban complex projects. In addition, Red Star Macalline continues to expand its large-scale home stores, moving towards the goal of “200 stores nationwide in 2020”.

Some analysts told reporters that although the acquisition has been rumored, this node is still relatively suitable. "The development of Red Star Macalline, from the original "staking" layout to the current need to rely on operational capacity to increase the value of assets, similar to the current Wanda."

Xue Yuwen said that the acquisition of JSWB is more to increase the value of commercial real estate with the improvement of operational capabilities. “The operational efficiency of home building materials has increased. Assuming that the annual rent or profit increases by 50 million yuan, the value brought by commercial real estate is not limited to this.”

It is worth noting that analysts also pointed out that the increase in the value of commercial real estate is also conducive to enclosure.

“Red Star Macalline has been considering listing, and putting business operations on the capital market will have a leverage effect. Therefore, the acquisition is not only at the operational level, but the appreciation of commercial real estate leverage is more objective. To the capital market is another heavy lever." Xue Yuwen pointed out.

A Red Star real estate insider told the reporter of "Daily Economic News" that the acquisition would indeed help the land acquisition and real estate sales.

The insiders said that these are only potential benefits, and they need to observe the reflection of the capital market in the future.

The battle of domestic enterprises in the home industry

In fact, in recent years, there have been many cases of bankruptcy restructuring and mergers and acquisitions in the home industry. In 2013, Gujia Furniture Group announced that it has cooperated with Ouyada Home Group Co., Ltd. to invest 100 billion yuan to build 100 large-scale chain trade integrated platforms in the third and fourth grade markets.

The acquisition of JSWB by Red Star Macalline also allowed the industry to see the trend of consolidation and concentration. Tao Wensheng, managing partner of Peking University Consulting, told the reporter of "Daily Economic News" that at present, the home circulation industry has not yet had a real "giant", and Red Star Macalline is already in the first legion. With the listing of companies in the industry, the subsequent mergers and acquisitions will be faster.

In the industry's view, the emergence of industry giants means that the industry is gradually maturing, which is conducive to the development of the home building industry. However, Xue Yuwen said that the scale effect will inevitably lead to the industry's giants, thus squeezing the living space of other home building materials channels.

It is worth noting that although the same is the hypermarket chain, the home building materials industry and the traditional daily department store hypermarket show a completely different competitive landscape. Foreign-funded hypermarkets account for a considerable portion of traditional retail sales, but even with the “alternative” of IKEA, foreign investment in the home building materials industry is different, accounting for a small proportion.

Xue Yuwen pointed out that IKEA's positioning is special and its expansion speed is not fast. In contrast, B&Q is currently doing relatively poorly in China. “In China, the home industry or local brands have a considerable advantage, especially in the mainstream market.”

Some people pointed out that there are too many home stores and the competition in the home market is increasingly fierce. How to maintain stable rental income and customer resources will be worried by Red Star Macalline. In this regard, Xue Yuwen pointed out that Red Star Macalline needs to worry about the impact outside the industry, such as e-commerce. “This industry has passed a period of rapid development, and competition within the industry has become more intense. Corporate mergers and acquisitions are all normal.”

The above analysts pointed out that competition in the home industry will be concentrated among domestic enterprises. "The home industry will have a big reshuffle. In this process, listed companies and online and interactive companies can survive better." Zhao Min said.

“This industry is very simple. There are only two competitive strategies, either scale or differentiate the market segments.” Xue Yuwen said.

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