The world’s largest garment maker, Hong Kong-based Crystal International Group, is hoping to raise up to HK$4.48bn (US$574m) in an initial public offering (IPO) that will be used to fund the expansion of its manufacturing operations and a move into fabric production.
The firm has priced the offering between HK$7.3 and HK$8.8 per share, with a total of 509.3m shares to be issued, according to its filing. Shares will begin trading on 3 November on the main board of the Hong Kong stock exchange.
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Crystal Group intends to invest the proceeds into expanding its manufacturing capacity, upstream vertical integration into fabric production, moving into new product categories, growing its sportswear and outdoor apparel business, and repaying loans.
Specifically, it intends to put US$224m into expanding its manufacturing capacity; with a further US$100m used for the upstream vertical expansion into fabric production in Asia.
Here it says the plan is to construct fabric mills in Bangladesh to produce fabrics that will be used in its lifestyle wear, sportswear and outdoor apparel production. It also intends to expand into fabric production in other locations where it currently has manufacturing facilities such as Vietnam.
According to a report in the South China Morning Post, the IPO has already attracted cornerstone investors from two key customers including Fast Retailing, the owner of fashion chain Uniqlo, and L (Overseas) Holdings, a subsidiary of Victoria’s Secret owner L Brands.
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By GlobalDataAccording to its prospectus, Crystal Group was ranked the world’s largest apparel maker by production volume in 2016 by research firm Euromonitor, and second by production value, with market shares of 0.4% and 0.3% respectively.
It also boasts seven out of the top ten leading global apparel brands as its customers, including H&M, Marks & Spencer, Gap, Levi’s, Abercrombie & Fitch, Under Armour, The North Face and Puma, which it supplies with a range of lifestyle wear, denim, intimates, sweaters and sportswear, and outdoor apparel.
As well as this diversified product portfolio, the company cites its “differentiated value-add driven co-creation business model” as key to achieving its industry leading position.
“Our co-creation business model has driven our ability to launch continuously new commercially successful products for our customers,” it says, from coming up with product and designs, through to developing and sourcing raw materials, optimising production costs through large scale global procurement and a multi-country manufacturing platform, and offering inventory management and delivery services.
Its 20 self-operating manufacturing facilities – six in China; four each in Vietnam, Cambodia and Bangladesh; and two in Sri Lanka – have a total gross floor area of around 1.3 million square metres, with a combined workforce of 70,000 delivering around 350 million pieces of apparel a year.
Crystal’s net profit stood at US$69.2m in the first half of this year, up 31% from the same period last year. It recorded full-year net profit of US$123.7m in 2016, US$68.3m in 2015, and US$81.8m in 2014.
Most of the firm’s revenue comes from just a few major customers, with sales to its five largest customers accounting for almost 70% of revenue last year. The firm expects it will continue relying on a limited number of high-quality customers in future.
just-style has reported extensively on Crystal Group’s growth and contributiion to greener, more sustainable manufacturing processes:
Big data contributes to Crystal Group sustainability gains
Nike and Crystal Group “doing well by doing good”
Crystal Denim cuts garment carbon footprint by 20%
