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训修实业集团有限公司(1962.HK):新股速递

Xunxiu Industrial Group Limited (1962.HK): IPO Express

致富證券 ·  Jun 29, 2017 00:00  · Researches

  Group Overview

The Group is a global manufacturer of hair accessories (including wigs, hair accessories, hair cliffs and high-grade human hair extensions). It designs, manufactures and sells a range of hair accessories made of synthetic fiber and human hair to different ethnic groups and the Halloween market. In 2016, the Group's revenue from the US market accounted for 76.3% of its total revenue. The group's main products sold in the US include synthetic fiber hair accessories mainly for women of African descent for daily wear, beauty and dress. In addition, the Group mainly sells high-end human hair extension products and other hair accessories designed for European and African women in the European and Asian markets. In terms of production lines, the group is divided into 3 and 2 production centers in China and Bangladesh.

According to Frost & Sullivan's report, in 2016, the group's synthetic fiber jewelry sales accounted for about 4.0% of the revenue market share of global hair jewelry manufacturers, ranking fifth in the world.

Industry Overview

According to Frost & Sullivan's report, in terms of revenue, the size of the global hair accessories market increased from 2,488 billion US dollars in 2011 to 5.039 billion US dollars in 2016, with a compound annual growth rate of 15.2%. The global hair accessories market is expected to reach 11.011 billion US dollars in 2021, with a compound annual growth rate of about 16.7% from 2016 to 2021.

Risks

Since hair accessories manufacturing is a labor-intensive industry, the Group's direct labor costs accounted for about 41.0% of its total sales costs in the year ending 2016. If labor costs and minimum wage regulations rise in China and Bangladesh, it will adversely affect the Group's financial situation, operating performance and prospects. In addition, the group also faced labor disputes. Its workers protested for a reduction in workload and improved benefits. At one point, the production base in Bangladesh experienced two shutdowns in 2013 and 2014. If labor disputes, work stoppages, or workers occur again in the future, it will hurt the group's business expression.

valuations

According to the prospectus documents, as of December 31, 2016, the sale of Insui Shares was completed and the hypothetical preferred shares were converted to the company's common shares. A total of 615 million shares are expected to be issued. Based on this calculation, the shareholders' share of consolidated tangible assets with unaudited notes adjusted for unaudited notes amounts to HK$569 million to HK$605 million, which is equivalent to a net net adjusted value of tangible assets of HK$0.92 to HK$0.98.

The translation is provided by third-party software.


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