Ziwo

Ziwo: Proposed to spend Rmb160m on a 25% stake in Xisheng (Quanzhou) Investment (XQI), a main contractor for infrastructure construction of Guanqiao Park in Quanzhou Economic & Technology Development Zone (QETDZ). The project, which spans across land area of 22,162 mu, is a prominent national-level development to relocate industries away from the city centre, jointly being developed with CMTCC Shanghai Shisanye Construction, a subsidiary of Metallurgical Corporation of China. Works have commenced for the project, with Phase 1 being valued at Rmb1b. The proposed investment would allow Ziwo to gain access into the industrial reconstruction industry, underpinned by a rising need to re-zone and redevelop new industrial sites in Quanzhou city in Fujian Province, China. This follows the 32% spike in share price over the past week to $0.131. Ziwo primarily manufactures Styrene Butadiene Rubber and Terilene Filament Yarn, for use in vehicle tires production and consumer fabric products. These segments account for 86% of the group's FY13 revenue of Rmb197.1m. Over the last few years, the industry for its products has been challenging, reflected in the gradual decline of the group's gross margin, which fallen 35.3% in FY09 to 15.6% in FY13. Based on the last close of $0.131, Ziwo trades at a trailing 13.6x earnings and 0.4x P/B.