Alibaba announced on the Hong Kong Stock Exchange at noon on December 17th that the company and another minority shareholder have agreed to sell 100% equity of Intime to a consortium of buyers consisting of members of the Yagor Group and Intime management team.
According to the announcement, Alibaba holds 99% equity of Intime, and the total proceeds from the sale of Intime are approximately RMB 7.4 billion. It is expected that a loss of approximately RMB 9.3 billion will be recorded due to the sale of Intime.
Why does Alibaba sell Intime even if it loses 9.3 billion yuan? What are the plans of Yagor Group to take over Yintai?
Yagor: Strong Chain Supplement
On December 16th, it was revealed that Alibaba plans to sell its shares in Intime Department Store to Yagor, and pictures of the back panel of the signing press conference are circulating online.
On the morning of December 17th, the stock price of Yagor Group's listed company, Yagor, fluctuated and briefly hit the daily limit up. As of the close, the company's stock price was 9.38 yuan per share, an increase of 3.65%.
On the noon of December 17th, the news of Alibaba selling its shares in Intime Department Store to Yagor Group was settled. Yagor Group replied to the public that the joint investment of the group and the management of Intime aims to "strengthen and supplement the chain" and improve the fashion ecosystem. After the investment is completed, Yagor Group will provide sufficient operational space for the management of Intime and support its further high-quality development.
According to the official website of Yagor Group, Yagor Group was founded in 1979 and is headquartered in Ningbo, Zhejiang Province, on the coast of the East China Sea. It is a leading enterprise in the national textile and clothing industry. In 2023, the sales revenue will reach 191.6 billion yuan, the total profit will be 4.2 billion yuan, and the actual tax paid will be 4.4 billion yuan. Ranked 36th among the top 500 private enterprises in China.
In addition to the textile and clothing industry, Yagor Group is also thriving in real estate market development and specialized financial investment. At present, a strategic investment system has been formed, with fashion industry investment as the main focus and other financial investments as auxiliary.
In recent years, with the adjustment of the real estate industry, Yagor has reduced its investment in real estate and increased its investment in the fashion industry. It has also aggressively entered physical commerce. In the first three quarters of this year, Yagor continued to strengthen its connection with top commercial entities, accelerating its entry into high-end shopping centers and adjusting key stores. Especially in the first three quarters, Yagor opened 12 new fashion experience centers. These "big stores" are not only Yagor's physical consumption flagship, but also attempting to become local fashion landmarks.
Alibaba further narrows its front line towards its core strategy
Yintai was once one of the benchmark cases for Alibaba's efforts in "new retail". In 2014, Alibaba Group made its first investment in Yintai Commercial, which was then listed in Hong Kong. On January 10, 2017, Intime Commercial announced that it had received privatization proposals from Alibaba and the company's founder, Shen Guojun. The joint offeror formed by the latter two intends to complete the privatization of the company for no more than HKD 19.8 billion. In 2018, Alibaba continued to increase its stake in Intime until it fully controlled Intime.
After entering the Alibaba system, Intime embarked on digital transformation, expanding its online and offline service scenarios, exploring business innovation, and upgrading consumer experience, achieving significant results. As of now, Intime Commercial has 60 department stores and multiple pending projects across the country. On line, Yintai has realized omni channel sales such as Meow Street APP, "Yintai Department Store INTIME" WeChat applet, "Yintai Department Store" Alipay applet, and realized the digitalization of Yintai offline counter goods. Consumers can choose to pick up goods at the store counter or choose to mail them home. Yintai Department Store has also launched a "timed delivery" service, with 80% of its stores delivering within an hour at the fastest. Intime Department Store has two major businesses, home and store. Its digital members have exceeded 40 million, and it has become an Internet department store with a comprehensive structure of cloud, online and offline integration.
Selling Intime will also help Alibaba further focus on its core business. E-commerce and cloud computing are the two core business areas identified by Alibaba. Recently, Alibaba has also fully integrated Taobao Tmall Group, International Digital Business Group, as well as e-commerce businesses such as 1688 and Xianyu, and established an e-commerce business group to further promote strategic focus at the organizational level.
In September 2023, Alibaba will conduct a strategic priority sorting of its existing businesses, clarify the long-term focus and high-intensity investment in core businesses, continuously improve user experience, and ensure that products always keep up with user needs for iterative evolution; For non core businesses, asset value can be realized through quick profitability or other capitalization methods in order to return value to shareholders.
Alibaba Group Chairman Joseph Tsai has stated that in the first nine months of the 2024 fiscal year (April 1 to December 31, 2023), Alibaba has completed $1.7 billion in non core asset sales. We still have some traditional physical retail businesses on our balance sheet, which are not our core focus, so it is very reasonable to exit, "said Tsai Chung hsin.
Alibaba's latest semi annual report shows that for the six months ending September 30th, the company's cash flow from exiting multiple investments was RMB 6.509 billion.
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