Fu Anna plans to take out 5% of the shares to the dealers’ interests.

Mid-high-end home textile brand Fuanna (002327.SZ) is planning to “bundle” the company closer to the interests of its core distributors.

The company recently received a letter of intent to share some dealers. Some distributors intend to sign management agreements with relevant professional management agencies to obtain Fuanna shares in a legal manner.

Although the details and the feasibility of the shareholding plan will be further discussed. However, Fu Anna said that the dealer's shareholding plan will be based on two points. First, the total number of shares held will not exceed 5% of the company's total share capital. Second, the corresponding shareholding rights of each dealer. The total number of shares accumulated does not exceed 1% of the company's total share capital.

An analyst who did not want to be named told the interface that the plan could stimulate the enthusiasm of major distributors, which may be related to Fu Anna's desire to further improve her performance and quickly recover the purchase price.

In the past few years, the overall home textile industry has been sluggish. The sales revenue of four major textile companies including Fu Anna, Luolai Life, Mercury Home Textiles and Mengjie Shares declined in different degrees during 2013-2016. Fuanna’s net profit growth rate has dropped from over 20% to less than 10% at the end of last year.

In the past double eleven sales period, Fu Anna's marketing volume was 164 million yuan, after the upcoming Mercury home textiles and Luo Lai life. The income of the latter two double eleven sales periods was 187 million yuan and 208 million yuan respectively.

A salesperson in the home textile industry said: "Fu Anna's price/performance ratio is slightly worse, and it feels worse than other homes. The fabrics of Luolai and Mengjie are better, some customers recognize it more expensive, and the overall price of Mercury home textiles is lower. Fuanna's products It is rather embarrassing, the price is not low, the first two years have repeatedly fallen into the quality door, quality supervision and spot checks have problems."

In fact, Fu Anna has always tried to boost her performance by increasing marketing efforts. The number of tactics can be described as "various."

The first “big move” was to increase revenue by increasing the amount of credit granted to dealers, which also led to a sharp surge in book receivables at the end of 2016.

According to public financial information, Fu Anna’s accounts receivable at the end of 2016 was 313 million yuan, a year-on-year increase of more than 60%, which was more than 125% higher than the end of the third quarter of 2016. The sudden large amount of confirmation of accounts receivable is prone to financial suspicion of adjusting profits. According to financial report data, Fu Anna's fourth quarter 2016 revenue and net profit was almost twice that of the other three single quarters, and the performance fluctuated significantly.

Fu Anna has received a letter of supervision from the Shenzhen Stock Exchange. In response to the surge in accounts receivable, Fu Anna disclosed that the increase was mainly due to changes in the sales structure.

The change in sales structure refers to the targeted expansion of the credit granting policy, including rational planning of the marketing cycle, establishment of band marketing credit, guiding customers to achieve large performance; establishing customer grading, selectively relaxing credit restrictions; extending credit terms.

An industry analyst analyzed that since the franchisees' funds are not very abundant, they have "borrowed goods" to the dealers through credit, although the goods have not arrived, but the goods have been sold to the franchisees, and the sales performance will increase.

If the franchisee's scheduled sales target is reached, then the profit can be obtained in the preferential activity, otherwise the goods will form the franchisee's inventory, making the franchisee's life more difficult.

Fuanna’s second “trick” is to increase the amount of marketing expenses. Fu Anna’s financial report shows that in the first three quarters of 2017, a total of 4.7 billion yuan was spent on various marketing and management expenses. The total cost accounted for more than 30% of the marketing revenue, which is close to the highest point in 2008.

However, this is not enough to allow Fu Anna to rebound. In the first three quarters of this year, Fu Anna’s sales revenue increased by only 14%. Luolai’s life grew by nearly 50% year-on-year. Another home textile company, Mengjie, grew by more than 50% year-on-year.

In the face of the coming home textile industry peak season, Fu Anna thought of the third "big move", is to launch a dealer shareholding plan.

The above-mentioned analysts who do not want to be named said: "If the dealer stock ownership plan is formed, and the interests of Fu Anna are more closely tied, the dealer holdings will certainly play a stimulating role, the terminal sales can be smoother, and the execution of the company's policies. Will be relatively stronger. The company's performance should be further improved."

However, Fuanna’s dealer shareholding plan has been questioned by some professionals. A senior financial analyst said in an interview with an interface journalist that Fu Anna could not help but boost sales through this move, but investors should be wary of the possible benefits behind the move. Since Fuanna’s dealers are not subsidiaries of listed companies, they do not disclose specific financial data on the financial statements. However, it is difficult for investors to know for sure whether the goods imported by the dealer from Fu Anna are completely sold.

The financial person further added that due to the existence of equity interests, if the dealer did not really sell the goods, the dealer may eventually hand over the money to Fu Anna. The popular point is that Fu Anna confirmed all the income on the statement, which is equivalent to putting her own stocks in these larger dealers or dealer customers. Such a result may have the possibility of overdrafting future income, and objectively may cause investors to have an illusion about Fu Anna's profits. Some listed companies in the automotive, heavy machinery and other industries have seen similar behaviors that have been questioned in the past.

Interface journalists have repeatedly called Fuanna Company and none of them answered.

The above financial analysts suggested that Fu Anna could increase the disclosure of the core financial data of the dealers to regulate, which can effectively dispel investors' doubts.

Since November, Fu Anna's share price has swayed around 10 yuan, and the current market value is 8.84 billion yuan.