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Apparel manufacturer Youngor Group walks on a tightrope
23
Feb '09
Real estate and equity investments, other than the garments business were once the cash cows of the Youngor Group, which delivered the highest profits. But as the adage goes, “What goes up, must come down”, with the decline of real estate and the stock markets, the fortunes have turned for the worse for the group.

The Youngor group has estimated to have lost tens of billions of Yuan and now is hanging on to a thin line bordering bankruptcy. These very two sectors which were considered as benchmarks for successful diversification of the group have now become like a noose hanging around the neck of the group.

In fact, experts say equity investments and real estate have turned in to a double jeopardy for the group, which use to derive around 50 percent of its profits from real estate dealings, the values of which have now nose dived to all time lows of the last few years, with the stock markets following the same trail.
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The Youngor group started operations in the real estate markets in 1992 and as per relevant sources the land reserves touched 2,894,000 square meters in September 2008, with investments touching 13.1 billion Yuan, 8.5 billion Yuan higher than the amount divulged in the information provided by the Company.

In the first three quarters of 2008, Youngor generated a net cash flow of 908 million Yuan from operating activities, compared with 1.70 billion Yuan over the same period in 2007, a sharp drop of 46.82 percent year-on-year. The profits are expected to reduce further in the last quarter of 2008.

Domestic clothing sales of Youngor are in good shape and 2008 sales revenues is expected to reach 3.0 billion and expected to grow by around 20 percent in the next two years.

Fibre2fashion News Desk - China

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Courtesy: H&M

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