Taisan's financial controller Patrick Kan on Money Mind.
CHINA TAISAN, one of China's leading functional polyester producers, was featured on Channel News Asia's MoneyMind program on Sunday (June 22).
China Taisan makes functional polyester fabric for sports and leisure apparel.
Its financial controller Patrick Kan told Money Mind the three factors that will spur the company’s growth.
(1) Technology advantage
“A key competitive advantage China Taisan has is its Taiwanese manufacturing technology,” said Patrick.
Its R&D capability is enhanced by collaboration with Industrial Technology Research Institute, Taiwan’s premier R&D organization.
The company uses cutting edge technology to manufacture fabrics able to keep the body of wearers cool. Its fabrics are also water and stain resistant.
Customers for its knitted polyester fabric include global players such as Nike, Adidas and Umbro as well as big local names such as Li Ning and Anta.
(2) Strong global and domestic demand for functional polyester
Numerous sports apparel retail outlets are mushrooming throughout China.
China is the world’s largest textile exporter. Domestic demand is also growing, spurred by rising income and living standards in China.
As the world’s fastest growing super economy, China has attracted numerous international sports brands to aggressively open retail outlets throughout the country.
Local brands have also been expanding their retail network.
Improving purchasing power is fueling demand for better quality products.
(3) Demand boost from global sporting events in China
”A third factor that will spur growth is the upcoming international games,” said Patrick.
The 2008 Olympic Games in Beijing and the 2010 Asian Games in Guangzhou will raise public interest in sporting activities, and lead to higher demand for the company’s functional polyester used for sporting apparel.
What about rising cost of manufacturing?
A major risk for the China Taisan is the rising cost of crude oil.
As polyester is made from petroleum by-products, cost of manufacturing is indirectly affected by volatility in crude oil prices.
Over S$55 million was raised from a recent IPO on 6 Jun of 233 million shares at 24 cents each.
Most of the proceeds will be used to acquire machinery.
Functional (performance) fabrics will show increasing contribution to top line, says financial controller Patrick Kan.
With prices of raw materials rising, is China Taisan a stock one should put money in?
Patrick believes a sound cost management system is in place.
For example, contract prices are adjusted for fluctuation in raw material costs every 20-30 days.
Hence, Patrick believes growth prospects will continue to look good.
Last year, the company’s net profits jumped 388% y-o-y to about US$26 million for FY07.
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