Huamao 58 Million 610 Thousand Shares 35% Stake In Lihua Cotton Industry

　　 Huamao shares (000850.SZ) In December 17th, it announced that it would invest 58 million 609 thousand and 400 yuan to improve the main chain of the textile industry. Assignee Zhang Qihai, a natural person, owns the Xinjiang Korla Lihua Cotton Industry Co., Ltd. (hereinafter referred to as "the" Lihua cotton industry (35%) stock right 。

According to the evaluation report issued by Beijing KELONG Asset Appraisal Co. Ltd., as at August 31, 2010, the value of the net assets of Lihua cotton company was 133 million yuan, the assessment value was 167 million yuan, and the market share of Huamao shares in the above shares was 1.26 times.

The main products of Lihua cotton industry are lint, cottonseed, short pile, cottonseed oil and so on. It has nine cotton processing and production lines, and has more than 650 employees. It has the annual production capacity of 200 thousand tons of lint, 75 thousand tons of cottonseed meal and 22 thousand tons of cottonseed oil.

Huamao shares said that the cost of cotton as the main raw material of the company accounts for more than half of its production cost. As one of the cotton high yield areas in the country, Xinjiang accounts for about 40% of the national output, and its quality, consistency and spinnability have all maintained a high level, which is the main raw material purchasing base for Huamao stock.

In addition, the supply of raw cotton market is less than the demand, and the supply and demand is seriously unbalanced. And this situation is not expected to be solved in a long time. Because of the requirements of the company's product quality, the purchase of raw cotton is mainly in the Xinjiang area. Xinjiang cotton has accounted for more than 70% of the total cotton used by the company.

Huamao shares fell 0.66% yesterday, closing at 9.05 yuan.