LFX(SH:600612) Xin Jing Bao·2025-10-11 12:45Core Viewpoint - The company, Lao Feng Xiang, is strategically investing in the high-end luxury market by acquiring a 20% stake in Maybach Luxury Goods Asia Pacific Ltd. for $24 million, aiming to leverage international brand resources to develop the luxury goods market in the Asia-Pacific region [1][2][3]. Investment Details - Lao Feng Xiang plans to invest through its subsidiary, Lao Feng Xiang Hong Kong Ltd. (LFXHK), acquiring 2,000 voting shares in Maybach Luxury Goods, representing 20% of the post-issue capital [1][2]. - The investment is not related to Maybach's automotive business, focusing instead on luxury lifestyle products such as optical goods, fashion apparel, perfumes, home goods, silverware, and pet products [2][3]. Market Context - Maybach Luxury Goods, established in 2013, operates in 75 countries with 617 retail outlets and plans to open six high-end boutiques in Asia, one in North America, and one in Europe by 2026 [3]. - This investment follows Lao Feng Xiang's previous establishment of a luxury sales company with a capital of 50 million yuan, indicating a consistent strategy towards high-end market expansion [3]. Financial Performance - Lao Feng Xiang's financial performance has been under pressure, with a 20.5% year-on-year decline in revenue to 56.793 billion yuan and a nearly 12% drop in net profit to 1.95 billion yuan for 2024 [4]. - The company's retail business has a gross margin of 23.61%, while the wholesale business, which constitutes over 70% of revenue, has a significantly lower gross margin of 9.39% [4]. Strategic Implications - The investment is seen as a trial for brand positioning, with the potential to enhance the company's image and accumulate luxury goods operational experience [5]. - However, the investment may not lead to immediate financial improvements, and the success of the brand agency business and local production will be crucial for future growth [5][6]. - The traditional franchise model may pose challenges in adapting to the high-end market, raising concerns about brand control and the ability to support brand premium [6].