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SCMP Reporter

PENINSULA Knitters, owned by high-profile Legislative Councillor Mr Henry Tang Ying-yen, will seek a listing on the Hongkong stock exchange later this year.

  It is expected the company will raise about $100 million from the listing. Wardley Corporate Finance has been appointed financial adviser, according to industry sources.

  The textile industry is expected to enjoy an up-cycle on the back of the recovery in the US market this year, according to an analyst.

   Sources suggest the price/ earnings ratio will be about seven times.

  Managing director Mr Tang refused to comment on the company's float.

  ''We have nothing to say at this stage, but I do not rule out the possibility of our company going public this year,'' he said.

  Peninsula Knitters is wholly owned by the Tang family. Mr Tang's father, Hisang-chien, is well known in textiles and is also active in politics, being a delegate to the Chinese People's Political Consultative Conference and a Hongkong affairs adviser.

  Peninsula Knitters was set up in 1968 with its manufacturing base in Hongkong, China and Britain. It specialises in cashmere and other knitted products.

  The company holds about a one-third stake in Shanghai United Textile Holdings, a joint-venture in Shanghai which was listed on the Shanghai exchange last year.

   About 75 per cent of the company's products is exported to the US, while 10 per cent goes to Europe and up to five per cent to Japan.

  Peninsula set up a factory in the UK in 1985, which accounts for one-third of the company's capacity.

  Set up to escape the import quotas on Hongkong-made products, the cost of production in Britain was slightly higher but there was no quota problems, Mr Tang said.

  ''Setting up production facilities in other places is to escape import quotas and it is cheaper than buying quotas,'' he said.

  He said it was hard to find suitable places because of quota problems and the language barrier.

  Peninsula Knitters has gone as far afield as Africa where it recently set up an associate company.

  ''We'll have to wait and see the progress before deciding on any future expansion because the production in Africa has just started,'' said Mr Tang.

  He suggested possible expansion would be in vertical integrations, like in the raw materials and the spinning process.

  He said the reason for considering a listing was in order to expand production capacity because ''our present production capacity cannot meet the orders''.

  He thinks US renewal of the Most Favoured Nation (MFN) trading status to China this year would not be more difficult than last year.

  ''The US administration understands that the effect of a refusal to renew MFN status to China means both sides will suffer ultimately,'' 



Tang knits together float plan