YOUNGOR Responds To "Deviating From The Main Business" Clothing To Be A Century Old Shop

"The company invested most of its annual income in clothing and textile manufacturing business. In 2008, the Group intends to continue to establish 50 marketing companies everywhere.

"In March 30th, Li Rugang, chairman of YOUNGOR group, and vice general manager Chen Zhigao, who attended Beijing's 2008 China International Fashion Fair, said in an exclusive interview with our reporter.

This is YOUNGOR's first positive response to "equity investment losses and deviating from the clothing industry".

In February 28th, Ningbo YOUNGOR property limited, a wholly owned subsidiary of YOUNGOR (600177.SH), acquired the right to use state-owned construction land in the west of Ningbo Beijiao road for 970 million yuan.

Qu Zhihang, senior researcher of Pingan Securities Limited, pointed out in the analysis report that YOUNGOR is laying the groundwork for further reserves of land in the future.

YOUNGOR has increasingly deviated from the relatively stable garment industry, shifting its vision to real estate and preparing to set up an independent real estate Limited by Share Ltd.

To expand overseas sales

"Li Rucheng, group president, has repeatedly suggested that our clothing should be a century old shop.

"In an interview with reporters, Li Rugang said.

"We want to wear textile as the leader, especially in the near future, the stock market has plummeted, the property market has dropped, and the industry is more stable than equity investment.

"Li Rugang said," we have more than 2000 retail terminal stores throughout the country.

We have a large garment production base and fabric production base in Ningbo.

Upstream, middle and lower reaches are in their own hands.

"

According to Li, YOUNGOR bought Smart and Xin MaSmart Shirt Xin Ma, a wholly owned subsidiary of Kellwood, in January this year.

And this is to extend overseas markets.

For YOUNGOR, exports and domestic sales account for half of the sales.

YOUNGOR's export products were mainly OEM.

"

Li Rugang disclosed that the company finally bought two companies at a price of less than $120 million.

"We do not plan to send executives into it.

"Li said that YOUNGOR has returned to the top of the new Malaysia company. At present, the teams, sales channels and executives of both companies have remained stable and their business is running normally.

However, Li Rugang said frankly that the production cost of Singapore and Malaysia is higher than that of China, and that the cost of production management is 3 dollars, while that of Ningbo is only 2 dollars.

The next step is to consider the relocation of production bases so that there is much room for appreciation.

"Due to environmental protection and high labor costs, there is little possibility of expansion in Ningbo. The group has invested 200 million yuan to buy more than 110 mu of land in Chongqing, and set up a shirt suit processing plant. The next garment base is planned to be established in Anhui.

"Li said.

Although YOUNGOR claims that it will not give up its main garment industry, its contribution to YOUNGOR's profit is getting smaller and smaller.

From the annual reports of YOUNGOR over the years, the contribution of clothing to YOUNGOR's profit is getting smaller and smaller.

In 2002, the total sales revenue of YOUNGOR was 2 billion 400 million, the total income of shirts and Western-style clothes was 1 billion 300 million, accounting for 54% of the total sales.

YOUNGOR's sales revenue in 2006 was 6 billion, of which the total income of shirts and Western-style clothes was 1 billion 700 million, accounting for only 28%.

Public information shows that since last year, YOUNGOR has begun to make a difference in the real estate sector.

The significance of real estate to YOUNGOR

Since last year, YOUNGOR has purchased 12 pieces of land in Ningbo, Suzhou and Hangzhou through public bidding, auction and hang up. The new land reserve area exceeds 1 million 400 thousand square meters.

Qu Zhihang, senior researcher of Pingan Securities Limited, pointed out in the analysis report that the wholly owned subsidiary of Ningbo, YOUNGOR Real Estate Co., Ltd. in the end of February purchased the right to use state-owned construction land in the west of Beijiao road in Ningbo at 970 million yuan, and "YOUNGOR went to the next city in the auction of land," which is a foreshadowing for further reserve of land in the future. "The right to use land in the west of Beijiao Road," he said.

"

Wang Rong, an analyst for United Securities and apparel industry, analyzed the annual report of YOUNGOR in 2006. The total proportion of real estate in the company's total income was 34.44%. In net profit, real estate accounted for 35.7% in 2006 and 36.99% in the middle of 2007.

Statistics show that YOUNGOR's current real estate revenue increased from 500 million in 2002 to 1 billion 900 million in 2006, an increase of 280%.

"Obviously, land revenue is replacing the status of equity income. Investors are concerned about whether YOUNGOR's ability to shift its vision to real estate can make up for the loss of equity investment.

"

More analysts pointed out that YOUNGOR may spin off the real estate business and go public.

Tx Investment Consulting Co analyst at Hua Hai analysis said that under the current market environment of tight macro-control, YOUNGOR is also likely to spin off its real estate business to Hongkong and other overseas markets.

For this statement, reporters from YOUNGOR group deputy general manager Chen Zhigao's mouth has been confirmed.

Chen Zhigao told reporters, "the group does have the intention to split the real estate business. However, due to the macroeconomic situation and policy constraints, and the absence of such a precedent in the country, there is no specific plan for how to implement it.

"We have to wait for the relevant policies of the relevant departments of the state to come out, so that we can further consider what to do in this part.

"

YOUNGOR group insiders told reporters that the development prospects of the real estate business is relatively good.

"Now, YOUNGOR's real estate business has developed to a certain extent and scale. In order to better manage the real estate business, the company decided to separate the business out of business.

It is only a matter of time before all conditions permit.

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