LFX(SH:600612) Mei Ri Jing Ji Xin Wen·2025-10-26 14:28Core Viewpoint - The acquisition of a minority stake in Maybach Luxury Goods Asia Pacific (MAP) by Lao Feng Xiang for $24 million raises questions about the necessity and rationale behind such a high premium valuation, especially since MAP has not yet commenced operations and was only established in February of this year [1][2][5]. Group 1: Acquisition Details - Lao Feng Xiang plans to invest $24 million to acquire 20% of MAP through its subsidiary, Lao Feng Xiang Hong Kong Limited, with the goal of expanding into the luxury market [2]. - The Shanghai Stock Exchange has raised concerns regarding the high premium valuation of MAP, which is reported to have an extraordinary valuation increase of 9,692,207.69% [1][5]. - MAP aims to open 75 stores within six years, leveraging the brand's existing global presence in 75 countries and a compound annual growth rate of 36.5% over the past four years [3][6]. Group 2: Market and Operational Risks - Lao Feng Xiang acknowledges potential risks associated with buyout-style procurement, including unsold inventory and the stability of brand licensing [3][4]. - Cultural differences, market competition, and changing consumer demands are identified as factors that could negatively impact future operations [3][4]. - The investment agreement does not include installment payment terms, which Lao Feng Xiang claims is to mitigate risks associated with transaction completion [4]. Group 3: Valuation Methodology - The valuation report indicates that MAP's equity value is estimated at $126 million using the income approach, with a significant valuation premium compared to its book value of $1,300 [5][6]. - Lao Feng Xiang defends the use of the income approach for valuation, citing the brand's established market presence and the structured distribution model that mitigates retail risks [6][7]. - Experts highlight that the high valuation may reflect the brand's luxury status and the potential growth in the Asia-Pacific luxury market, but caution against the risks of brand value collapse [8].