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Red Dragonfly shoe "fly" into the large shares for the listing
Zhejiang Red Dragonfly Shoes Co., Ltd., a well-known shoe brand, has recently accelerated its pace in capital market operations. The company is now actively preparing for an A-share listing and has started preliminary preparations. On the day before, the stock surged to the daily limit following a major announcement about the latest developments involving Red Dragonfly.
Red Dragonfly's entry into Dashang Shares was announced through a significant transfer of state-owned property rights. Approved by the Dalian Municipal People's Government and the Dalian SASAC, on October 28, Shenzhen Manifen Knitwear Co., Ltd., Zhejiang Red Dragonfly Footwear Company, and Bosideng AG signed a contract to transfer 100% of their state-owned property rights in Dashang Group. Each company will transfer 40%, 33.33%, and 26.67% of these rights respectively.
Dashang International, a subsidiary of Dashang Group, holds 8.8% of Dashang Shares (25,859,585 shares). Once the property rights transfer is approved by relevant authorities, the three companies will indirectly hold Dashang Shares. Specifically, Red Dragonfly will hold 8,619,000 shares, representing 2.93% of the total issued shares. However, after the capital increase by Dashang Investment Management Co., which includes key management members, the shareholding percentages will be adjusted to 30%, 25%, 20%, and 25% respectively, leading to a reduction in the indirect stake of Dashang Shares held by the parties to 2.64%, 2.2%, 1.76%, and 2.2%.
This positive news boosted Dashang Shares despite a sharp drop in the broader market. The stock rose steadily and closed at the daily limit in the afternoon. Looking ahead, entering the A-share market may just be part of Red Dragonfly's broader expansion plans.
Recently, Qian Jinbo, chairman of Red Dragonfly, mentioned in an interview that the company is actively advancing its A-share listing plan and aims to submit the application materials to the CSRC next year. According to executives, the goal is to complete the listing by the end of 2010, with an expected issuance of 100 million shares.
Zhou Wenzhou, chairman of SME Promotion, commented that the listing would be beneficial for both Red Dragonfly and the market, helping to gain experience and improve future public offerings.
Founded in 1995, Red Dragonfly has grown from a shoe manufacturer to one of Wenzhou’s most recognized brands. The group now includes over 10 wholly-owned subsidiaries such as Zhejiang Red Dragonfly Shoes Co., Ltd., Red Dragonfly Wenzhou Children's Products Company, Shanghai Jie Road Sporting Goods Company, and Guangzhou Hot Shoes Industry Co., Ltd.
According to a responsible person from Red Dragonfly Group, sales increased by 29% and profits rose by 30% from January to September this year—among the fastest growth rates in the Wenzhou shoe industry.
Regarding Dashang Shares, the transfer of property rights was priced at 180 million yuan, with Manifen investing 73.86 million yuan, Red Dragonfly 61.44 million yuan, and Bosideng 49.25 million yuan. With a total of 25,859,585 shares transferred, the per-share price was less than 7 yuan. On the day of the announcement, the closing price of Dashang Shares reached over 41 yuan, indicating that Red Dragonfly acquired a valuable stake at a discount.
In September, the entire 100% equity of Dashang Group was listed on the Dalian Property Exchange. At that time, Dalian SASAC imposed strict conditions on the transferee, requiring them to be a production-oriented corporate entity with over 10 years of operation, long-term cooperation with Dashang Group, and the main products supplied to its department store business. They also needed to have the title of China Famous Brand and China Well-known Trademark. Therefore, it can be said that Red Dragonfly and other private enterprises were carefully selected by Dalian SASAC.
Despite the recent surge, Dashang Shares faced challenges. According to a statement released on October 17, the company expects a loss in 2009 due to excessive store openings and blind expansion. Analysts like Qian Xiangjin from CITIC Securities believe the current stock price is not justified based on the company’s fundamentals.
A source from Red Dragonfly told reporters that the company has a strong focus on retail, and Dashang Group’s position in commercial circulation offers valuable experience and resources. Currently, Red Dragonfly also owns another well-known sports brand, "Czech Road," and follows a strategy centered around terminal retail.