Monday, November 22, 2010

China Gaoxian

China Gaoxian: targets 20-30% growth in 2011 sales volume, vs single-digit growth this yr, as capacity for higher-end polyester yarn increases to 240k tpa by 1Q11, from 210k tpa currently. Earlier this yr, Gaoxian also invested Rmb 172m to ramp up its pdtn capacity for warp-knit fabric to 81k tpa from 17k tpa…

Mgt sees ASPs rising 17-24% to Rm 17-18/kg in 4Q vs Rmb 14.5/kg achieved in 9M10, due to higher raw mat’l prices and resilient demand. Catalyst includes listing of Korea Depository Receipts by early 2011, and using part of proceeds for moving upstream into pdtn of raw mat’ls to improve scale and overall gross profit margins…

Gaoxian sells most of its pdts to wholesalers in China, that in turn provide the fabrics to end-users incl sportwear firms like Nike, Li Ning, Anta. P/E trades at 3.96x vs hist avg at 2.81x. China Sky Chem Fibre trades at 12.1x compared to hist avg 33.3x.

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