Lining Expects Profit Margins To Fall Below 5% In 2011.

Due to declining revenues and rising costs, equity holders are expected to overtake in 2011.

Due to the weak growth of orders and the influence of some dealers' inventory, it is expected that income in 2011 will drop by about 6-7%, and gross margin will be reduced by about 1-1.5 percentage points from 47.3% in 2010.

Lining is expected to announce the 2011 Annual Report by the end of March 2012.

In 2012, the company will continue to implement the reform strategy, improve profit margin level, adjust product mix, enhance the retail efficiency of the two to four line market, further clean up the retail end inventory, speed up capital turnover, and seize the London Olympic market opportunity to enhance brand image.

The company also announced plans to issue 561 million yuan and 189 million yuan convertible bonds to private equity fund TPG and Government Investment Company, respectively (GIC).

The annual interest rate of convertible bonds is 4%, which is due to expire in 5 years, and the initial change price is HK $7.74 per share, which is 15% higher than the current stock price of HK $6.72.

Meanwhile, Victory Mind Assets Limited, wholly owned by the chairman Lining family trust, sold the company's shares to 4 executives including TPG, including Zhang Zhiyong, chief executive of the company, totaling 57 million shares.

After the sale of the shares, Lining will still hold 25.4% and 22.83% of the shares issued and convertible bonds issued, and TPG will have 5.02% and 12.1% of the issued shares and convertible bonds issued.

Lining has suspended the licence since January 18th and will resume trading today.