UNIQLO And Semir'S Fabric Suppliers Go To IPO To Expand Their Annual Production Capacity To 225 Million Meters.

Another textile giant is on the market in Hongkong.

Ya Dong Group Holdings Limited (hereinafter referred to as "Ya Dong group") recently submitted a IPO prospectus to the HKEx. The Ya Dong group plans to use the proceeds for the following purposes: upgrading and improving existing production lines and technical capabilities, expanding production capacity and product coverage, acquiring a company with existing production plants in Jiangsu and general enterprise use and working capital.

Ya Dong group plans to upgrade the existing machinery and equipment of Jiangsu Changzhou plant to upgrade new machinery and equipment and upgrade the existing production line and technical capability. It is estimated that the annual output will be increased by no less than 100 million meters, and it is expected that the technology upgrading and improvement will be completed before the two quarter of 2021. In addition, the company plans to acquire the production capacity of the textile fabric with an annual output of 1-1.5 billion in Jiangsu. The company's acquisition will be completed by the end of 2021, and the total annual output of the fabric will increase by about 200 million -2.5 billion.

In addition, in order to reduce operating costs, Ya Dong group plans to expand production facilities outside China to Southeast Asia in order to enhance its competitiveness, especially for overseas market customers and its direct brand operators in Southeast Asia with its designated manufacturers.

The prospectus IPO prospectus shows that Ya Dong group is located in Changzhou, Jiangsu, and was registered in Hongkong in 2011. Since 2011, it has been engaged in the sales of textile fabric products and expanded its business in 2014. Through Ya Dong (Changzhou) (set up in 2014 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.

Ya Dong group is mainly engaged in designing, processing and selling textile fabrics. The textile products of Ya Dong group can be divided into two main categories, plain cloth and corduroy. Its textile products have various colors, patterns, textures and functions. The company mainly sells textile fabrics to clothing manufacturers and trading companies, and is also the fabric of UNIQLO, Semir and other brands. The supplier's products are mainly sold and processed to garment manufacturers and trading companies in China, Japan and a number of other Asian markets (such as Taiwan, Vietnam, Bangladesh and Indonesia).

Financial reports show that in 2018, Ya Dong group and UNIQLO procurement agent to cooperate to achieve sales of 123 million 400 thousand yuan, accounting for 14.5% of the same period, the first largest customer. In the 2017, 2018 and 2019 fiscal year, the earnings from the largest customers accounted for 11.9%, 14.5% and 9.9% respectively. The revenue from five major customers is about 41.3%, 38.6% and 38.1% respectively. As early as 2014, Ya Dong group has established long-term business relationship with UNIQLO, and has been named one of its most trusted business partners by UNIQLO.

Over the same period, the purchase of Ya Dong group to the largest suppliers accounted for about 32.1%, 23.6% and 19.7% of the total purchases respectively, while the purchases to the five suppliers accounted for about 64.2%, 66% and 62.1% of the total purchases respectively.

In 2017, 2018 and 2019, Ya Dong group's operating income reached 661 million yuan, 861 million yuan and 866 million yuan respectively, with gross profit of 81 million 690 thousand yuan, 113 million yuan and 129 million yuan respectively.

Prospectus shows that from 2016 to 2018 and up to June 30, 2019, Ya Dong group achieved operating income of 387 million yuan, 662 million yuan, 861 million yuan and 405 million yuan respectively, gross profit of 47 million 219 thousand yuan, 81 million 690 thousand yuan, 113 million yuan and 55 million 138 thousand yuan respectively, and the net profit attributable to the parent company was 2 million 986 thousand yuan, 30 million 563 thousand yuan, 30 million 563 thousand yuan and Yuan Yuan respectively.