Hongguo International - Riding on the needs of modern woman .

Hongguo , is a specialised designer, manufacturer and retailer of high-quality fashion footwear headquartered in Nanjing, China. With manufacturing facilities in Nanjing and Dongguan, Hongguo shoes (under in-house brands C.Banner 千百度and E.Blan 伊伴) are available at over 500 points of sale across China’s major cities and provinces. In 2004, C.Banner was ranked third in terms of market share for the third year running, according to an annual market survey of the ladies’ leather shoes industry conducted by the National Statistics Board of China. Apart from its principal business in footwear, Hongguo also wholly owns Jiangsu Unity Corporation, a retail management company distributing fashion brands such as Ermenegildo Zegna, Hugo BOSS, MaxMara, G2000 and U2 in eastern China.

Everytime, when i bypass the Citylink to Suntec City for meetings and dinners. I can't help but notice that the shoe shop that sells ladies footwear is often crowded with masses of woman some accompanied with roaming eyed male partners. I decided to do a scuttlebutt method in this instance. I travelled around popular shopping malls in Singapore and found that woman really like their shoes and there are so many shoe selling shops around Singapore. The non surprising fact is that some shops cater only to female counterparts.

In office, I noticed that my female colleagues change their shoes to fit in their attire. Like pink or red when they are more casual, black and pointy ones when they are in more formal mood. They admitted that beautiful shoes are often the most tortuous. For the matter of fact, its so digusting if you noticed that beneath the table, they often take off their shoes. Ever noticed that? Price to pay for staying pretty. For guys like me, we just keep to the normal leather shoes. We dont keep many pairs around as one good pair already cost above $200 bucks. Not much variation either. One good example is of my own sister whom has a wide collection of shoes, often just a wear it once and that's it scenario.


All these paints a nice scenario for Hongguo.


On 08 November, Hongguo signed an 8-year exclusive license agreement for the distribution and retail of Lumberjack brand in China with an established shoe designer, 3A Antonini. The Group plans to set up 90 Lumberjack outlets in the first three years starting 1Q06. Hongguo shall also take on a 75% stake in the JV, with 3A Antonini taking up the remaining 25% stake. The JV will set up a new production line in Nanjing capable of producing 270k pairs of shoes p.a., and engage in ODM of Lumberjack ladies’ shoes for the Europe market. This would raise the Group’s total annual production capacity to c. 2.8m pairs.

Hongguo's in-house brands C.Banner 千百度 recently emerged as the second most popular lady shoewear in terms of sales marking any milestone for the company and provides further evidence that the company's strategy is working and that the management stays ambitious as ever.

2006-01-27 美丽华再创佳绩 千百度全国销量第二

近日，从国家统计局中国行业企业信息发布中心传来喜讯，2005年度美丽华企业生产经销的千百度女皮鞋荣列全国同类商品销售额第二位，这是继2002－2004年度千百度女鞋连续3年取得全国同类产品销售额第三的佳绩后，美丽华人用智慧与汗水，创造的一个新的高峰！

集团董事长、总裁陈奕熙得知此信息后，向全体美丽华员工表示了衷心的感谢和敬意，他高度评价了美丽华所取得的这一成绩，认为“这是有着决定意义的一步，有了这一步我们就有了向第一名冲刺的坚实基础１


Management is seen as open and intelligent. In 17 May 2005, Hongguo's chairman granted 13.5 million vendor shares meant to reward management and also ensure
continuity at a time of increased opportunities for outsourced manufacturing and growth in retail sales. This is seen as positive as its good recongnition to those who would "fought" along with the company. The grant of the options for vendor shares, assuming they are fully exercised, will not result in any dilution of the existing share capital base, but will reduce Mr Chen Yixi’s stake in the Company from the current 32.86% to 29.21%, if fully exercised. Under the terms of the agreement, the 10 managers can only exercise the options provided they remain in Hongguo’s employment till at least 31 December 2010. Keeping talents and recognising talents is a positive move by the management.

Hongguo group did their bit part of charity by contributing 50 thousand dollars to the needy. A company with a wide, caring heart is always welcomed.

2006-01-18 集团向南京市高淳县部分特困家庭捐赠5万元人民币

集团继去年12月份随南京市委统战部、市工商联“光彩事业高淳行”向高淳县古柏镇中心小学捐赠400册图书后，1月21日，再次响应光彩事业促进会的号召，积极参加“温暖千户特困家庭，和谐共迎新春佳节”扶贫捐赠活动，向高淳县捐赠5万元人民币，资助高淳县部分特困家庭的大、中、小学生的学费和特困农户生活费，让特困家庭和农户感受到了党的关怀和民营企业家的温暖，过一个欢乐祥和的新春佳节。


Hongguo has the capability to double its business every 5 years with a combination of organic and acquisitive growth. Its markets are intensely competitive, but it is now reaching an attractive scale of integrated manufacturing/retail operations that makes it a formidable competitor.


Today's share price of 0.335 is approximately 75% undervalued from the rough estimate of intrinsic business value.








Cheers
Niversphere

Please read the prospectus and perform your analysis before making any investment decision. The above does not constitute a recommendation to apply for this company. I will not be liable for any losses incurred by anyone who invests based solely on the above-mentioned information.