Trading of Belle is suspended today, pending an announcement related to thetakeover and merger code . We believe the possible reasons are:
Privatization. Given the need for restructuring, it might be more effectiveas a private company. Share price has been depressed too. Book valuewas RMB3.1/share by end of 1HFY18. Major shareholder, Tang family has~ 21% stake in the company.
Change in shareholding. With new forms of retail challenging the market,especially on ladies footwear, the company might want to invite strategicpartners who have online or O2O experience. This could help in itstransformation.
Spinning off of sportswear business. As ladies footwear remains a drag toearnings, we believe spinning off the sportswear operation is possible.Sportswear business’ growth driver remains healthy.
Acquisition. With formal ladies footwear not performing well, the companymight seek to acquire casual or sports casual footwear. It has ~ net cash ofRMB6.9bn by end of August 16 (1JFY18). However, we believe that this isnot likely, given management’s conservative approach. It would ratherreserve some cash for its ladies footwear business.
We are waiting for official announcement.