Substantial exposure to fluctuations in cotton prices. Limited product range and lack of pricing power. Leading share of a niche market. Good cost position and profit margin recovery. Improving operating cash flow and debt leverage. Highly volatile cash flow. Execution risks from aggressive capacity expansion in Xinjiang. The stable outlook reflects our expectation that China-based Texhong Textile Group Ltd. will improve its profit margin and debt leverage over the next 12 months, mainly because of stabilizing cotton prices in China. The outlook also reflects our view that execution risks from the company's investment in Xinjiang are generally manageable. We could lower the rating if Texhong's profitability and cash flow materially deteriorate due to more aggressive debt-funded expansion or more volatile
