Ya Dong Group'S Hong Kong Stock Exchange Delivered Third Of The Textile Industry In Jiangsu Province.

According to the disclosure of HKEx in November 27th, Ya Dong Group Holdings Limited submitted its listing application to the HKEx, and its strong financial capital was its sole sponsor.

Ya Dong group is mainly engaged in the design, processing and sale of textile fabrics, as well as processing services. The company's textile products can be divided into two main categories: (I) plain cloth; and (II) corduroy. Textile products have a variety of colors, patterns, textures and functions. The company mainly sells textile fabrics products to clothing manufacturers and trading companies. It is learnt that during the past performance, most (or all) of the fabric products of the company were bought and processed by customers, providing clothing for brand clothing operators (some international or domestic brand operators, such as UNIQLO and Semir). During the performance period, the company's textile products are mainly sold or distributed in some other markets in China, Japan and Asia (such as Taiwan, Vietnam, Bangladesh and Indonesia).

The company was incorporated in Hongkong in 2011. Since 2011, the group has been engaged in the sales of textile fabric products and expanded its business in 2014. Through the Ya Dong (Changzhou) (2014) establishment in China, textile fabric product design and processing were carried out. The company's production facilities are located in Changzhou, Jiangsu, China. According to Ipsos report, Jiangsu is one of the five major industrial clusters in China's textile dyeing and finishing industry, playing an important role in printing and dyeing fabric production in China.

The company's business model is built on the core value of providing high quality, timely delivery and reliable services, meeting customer expectations, continuously improving customer satisfaction and maintaining an environmentally friendly manufacturing process.

In terms of customers, from 2016 to 2018 and up to June 30, 2019, customers of textile fabrics purchased mainly include garment manufacturers and trading companies. The revenue from the largest customers is about 14%, 11.8%, 14.5% and 11% respectively, while the income from five major customers is about 42.6%, 40%, 38.6% and 41.7% respectively.

In terms of suppliers, the company buys raw materials from local suppliers in China. During the past performance, the purchases to the largest suppliers accounted for about 26.5%, 32.1%, 23.6% and 21.5% of the total purchases respectively, while the purchases to the five largest suppliers accounted for 58.9%, 64.2%, 66% and 65.7% of the total purchases respectively.

Competition pattern and market share

The total value of China's clothing retail sales increased from 2014 to 2018, from 12563 yuan in 2014 to 13707 billion yuan in 2018, and the compound annual growth rate is about 2.2%. The growth of retail sales in China's clothing retail market is due to: (1) increased disposable income; (2) online retail is becoming more and more popular; and (3) the concept of individuation is constantly increasing. Since the slowdown in China's economy has had an impact on clothing consumption, the growth in total retail sales has narrowed since 2015. In particular, the slowdown in economic growth and the continued decline in China's stock and consumer markets led to a decline in the value of China's clothing retail sales in 2018. During the forecast period, with the (1) urbanization going forward and (2) the increasing middle class population, the total retail value is expected to increase rapidly. The total value of retail sales is expected to increase from 14020 billion yuan in 2019 to 19130 billion in 2024, with a compound annual growth rate of about 6.4%.

According to the Ipsos report, the market of China's textile dyeing and finishing industry is scattered. In 2018, the market share of China's five major textile dyeing and finishing service providers was only about 6.3% of China's total market value, while most of the rest of the market were small and medium service providers. According to Ipsos report, in terms of revenue, we ranked third in Jiangsu textile dyeing and finishing service providers in 2018. The company recorded an income of about 861 million 500 thousand yuan in 2018, accounting for about 0.2% of China's total market capitalization, accounting for about 1.6% of the total market capitalization of Jiangsu.

Financial situation

Prospectus shows that from 2016 to 2018 and up to June 30, 2019, the profits of the company were 387 million yuan, 662 million yuan, 861 million yuan and 405 million yuan respectively; gross profit were 47 million 219 thousand yuan, 81 million 690 thousand yuan, 113 million yuan and 55 million 138 thousand yuan respectively, and the profits in the year / period were 2 million 986 thousand yuan, 30 million 563 thousand yuan, 30 million 563 thousand yuan and Yuan Yuan respectively.

During the past performance, the sales cost of each company accounted for about 87.8%, 87.7%, 86.9% and 86.4% of the total revenue respectively. Among them, the cost of materials accounts for about 73.7%, 80.4%, 81.7% and 81.9% of the total cost of sales respectively, and accounts for the largest proportion in the cost of sales.

Fund-raising uses: (1) to upgrade and upgrade existing production lines and technical capabilities, thereby expanding production capacity and product range; (2) to acquire a controlling interest (or total interest) of a company with annual production capacity of about 10 million to 15 million meters in Jiangsu, China, to expand production capacity; and (3) to be used for general enterprise purposes and working capital.