Huafeng in HK$280m capacity growth bid
Hong Kong-listed Huafeng Textile International, which is seeking a listing in South Korea, plans to invest HK$280 million to expand its fabric processing and yarn-spinning capacity as well as to tap retail business.
The fabrics maker based in Shishi, Fujian, planned to invest HK$50 million to acquire or open about 50 retail outlets in second- and third-tier mainland cities next year, executive director Cai Yangbo said yesterday.
'The downstream retail distribution business could help strengthen our existing fabric processing and yarn spinning business,' Mr Cai said.
Huafeng Textile, which reported a 9 per cent increase in net profit to HK$49.3 million for the six months to March, also plans to invest 150 million yuan in a new yarn spinning plant in Shishi with an annual capacity of 13,000 tonnes.
Construction work on the new plant will begin in the second half of this year, according to Mr Cai.
Production is expected to start in the first half of next year.
The company is also in talks to acquire a dyeing plant in Shishi with an estimated investment of about HK$80 million. The plant could add capacity of about 20,000 tonnes a year.
'The Shishi government has stopped issuing new dyeing licences since last year due to environmental reasons, so we can only expand our dyeing capacity by acquisition,' Mr Cai said.
He said those expansion plans would be funded by its first-time share sale in Seoul, which he expected to be completed in August.
Huafeng Textile, which will be the first foreign firm to list in Korea, plans to sell up to 300 million new shares or 25.4 per cent of its enlarged share capital to raise about HK$300 million.
Mr Cai also said the company's gross profit margin for the year to September was expected to rise five percentage points to 33 per cent from 28 per cent a year earlier, as fabric makers in Shishi had teamed up to raise textile and fabric processing fees by 8 per cent in March.
