SHANGHAI- Youngor , China's biggest shirt company, plans to consolidate its property assets into a holding firm and expand the business, as it seeks to diversify away from the highly competitive garment industry, a company official said on Friday.
"Our property business is catching up with our garment business. We're buying more land and aim to become a nationwide developer," said company board secretary Liu Xinyu, adding the property holding firm would be set up by the end of June.
Shanghai-listed Youngor owns properties in the eastern port city of Ningbo, its home base, and several nearby cities. Real estate business accounted for nearly one third of Youngor's sales of 3.4 billion yuan ($478 million) in the first half of 2007.
Youngor may spin off the planned real estate holdings company for a stock market listing to better bankroll its property business, said Yu Huahai, analyst at TX Investment Consulting Co.
"Shirt making is a thin-margin business and garment export is becoming more difficult," Yu added. "So it's understandable that Youngor is expanding its real estate business, despite government moves to cool the industry."
Over the past few years, China has taken a series of measures, such as loan restrictions and interest rate hikes, to prevent the real estate industry from overheating.
Youngor, led by its president Li Rucheng, has also established a reputation as a smart financial investor. It recently sold down its stock portfolios, including stakes in CITIC Securities Co and Bank of Ningbo 002142.SZ, reaping handsome profits.
At the end of September, Youngor's financial holdings totalled 14.52 billion yuan, more than half of its total assets of 22.9 billion yuan. Returns from financial investment helped to boost Youngor's 2007 profit by more than 140 percent.
Youngor, after 20 years of toiling in China's crowded shirt-making industry, is also expanding its garment business overseas. In November, Youngor agreed to buy U.S. clothing maker Smart Shirts from Kellwood Co for $120 million in the first major overseas acquisition by a Chinese clothing maker.
($1 = 7.1072 yuan)
