Xidelang Holdings Ltd (-ve)

XIDELANG (Fundamental: 1.3/3, Valuation: 1.5/3), a China-based sports shoes and apparels manufacturer, rose 5.7% to 18.5 sen last Friday. Its shares have seen active trading since it proposed a 1-for-3 bonus warrant issue in May.

On July 29, Xidelang entered into a non-binding agreement to acquire the entire business of a clothing manufacturer YangSen which manufactures apparels on original design manufacturing (ODM) basis for international third-party brands.

Xidelang did not give an estimated purchase price but proposed to satisfy the acquisition via a mix of cash and/or issuance of new Xidelang shares at 22 sen per share, representing a 29% premium over its share price on July 28. 

According to its second reply to Bursa’s query, YangSen posted a total profit of CNY57.1 million in 2014 with net asset of CNY119.8 million. By comparison, Xidelang recorded a net profit of CNY49.6 million in 2014 with net asset of CNY1.2 billion.

This article first appeared in digitaledge Daily, on August 10, 2015.