Fujian-based men's fashion designer and wholesaler China Lilang hopes to raise US$150 million through a flotation on the Hong Kong stock market as the company widens its brand promotions and expands franchises. The company, which owns the Lilanz label, expects net profit for the year to December to be not less than 280 million yuan (HK$317.74 million). The projection is 82 per cent higher than last year's 154 million yuan and 192 per cent more than the 96 million yuan in 2007. 'About 90 per cent of this year target sales have been secured so far,' said chairman Wang Dongxing. Last year, the firm's turnover was 1.13 billion yuan, making it the mainland's largest mainstream menswear brand by sales value. He said the proceeds from the stock offering would be used to increase Lilang's brand recognition and to build up a separate brand, L2, in March next year. The funds would also finance the establishment of an enterprise resource planning system to manage and co-ordinate all the resources, information and functions of a business from shared data stores, he said. The listing will also accelerate the company's expansion plan, Wang said. Lilang, which has 2,490 franchised stores of 100 square metres in size in 31 provinces, plans to expand that number to 2,600 this year. The franchise stores can be found in provinces such as Hubei, Henan, Jiangsu, Anhui and Guangdong. The company only has one self-owned 1,000 sqmetre flagship store in Fujian, while the remaining outlets operate through franchising. 'We supply a full collection of Lilanz business formal and casual wear plus accessories of ties and belts to our franchisee. We will not be involved in retail business,' Wang said. The firm sells its products at discounts ranging from 55 per cent to 61 per cent of the retail price to distributors, with variations depending on the size of the orders and the popularity of the items. Wang said half the products would be made by the company while the remainder would come from original equipment manufacturers. The company's gross profit margin is 30 per cent and Wang expects the L2 brand, which carries younger men's clothing, would be higher as it would directly deal with retailers instead of through distributors. The firm, founded 20 years ago, controls 3.4 per cent of mainstream menswear brands on the mainland. Other brands include K-boxing, Septwolves and Joe One. Lilanz business suits sell at a retail price of to 550 yuan to 750 yuan. Looking good Lilang float proceeds to build brand and promote young clothing line Last year, the firm led menswear brand sales with total value of, in yuan: 1.13b yuan
