KUALA LUMPUR (July 29): Xidelang Holdings Ltd has entered into a heads of agreement (HOA) with Jinjiang Yangsen Garments Co Ltd for the acquisition of the latter, to expand its business to include the manufacturing of apparels.

“Presently, Xidelang is principally involved in the design, manufacturing and marketing of sports and leisure shoes as well as design and marketing of sports and leisure apparels.

“The proposed acquisition, if successful, will enable Xidelang to vertically integrate its existing operation and further strengthen and complement its existing designing and marketing of apparels leading to increase in sales of its apparels division,” it said in a filing with the exchange today.

Jinjiang Yangsen is involved in the design, manufacturing, distribution and marketing of apparels for various internationally-recognised brands including Primark, Mizuno, Joma, Killtec, NewYorker and Admiral, which are distributed to international markets.

Xidelang (fundamental: 1.3; valuation: 1.5) said the parties will enter a definitive agreement within three months from the signing of the HOA, upon conclusion of negotiations.

The company said it intends to satisfy the purchase consideration of the proposed acquisition via cash and/or issuance of new shares, subject to the consideration amount to be agreed upon by the parties.

It will also seek approval from its shareholders for the proposal at a special general meeting, as the contribution from the manufacturing of apparels could exceed 25% or more of its net profits in the future.

Xidelang rose 0.5 sen or 2.9% to close at 17.5 sen for a market capitalisation of RM224.73 million.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)