Saturday, December 13, 2008

China textile industry consolidates

Interesting post from D.O.G abt consolidation in the China textile industry after years of growth.

According to this article from a PR firm (I cannot confirm the figures) on Li Heng:
  • In 2007, China became worlds largest nylon producer... but is still a net nylon importer, relying on imports for high-grade nylon.
  • The nylon produced by Li Heng is of a quality that borders on domestic and import grade (e.g.: undergarments, swimwear)
  • Li Heng is a leading producer of high-end nylon in China with a 15% market share...and has one of the highest operating margins (34%) among textile players
  • Polyamide, a by-product of oil, comprises over 90% of Li Heng’s cost of sales.
  • Inventory management is important as nylon has a shelf life of only 5 months
  • To address cost pressures, Li Heng is looking to produce its own polyamide by 3Q09
I have not looked at Li Heng closely - have not even looked through their financial results.