Texhong Textile Group Ltd.

Limited product diversity and lack of pricing power. Substantial exposure to fluctuations in cotton prices. Geographically diversified production base. Leading position in a niche market within the textile industry. Volatile profitability and cash flow. Good free cash flow generation over the next 12 months owing to active management of working capital and declining capital expenditure needs. Improving liquidity position as Texhong's debt maturity profile improves. The stable outlook reflects our expectation that Texhong Textile Group Ltd.'s increasing capacity in Xinjiang and Vietnam will continue to drive strong sales volume growth over the next 12 months. We also expect the company to maintain its debt-to-EBITDA ratio at around 2x. We anticipate that the company will actively manage its capital structure and

...Good free cash flow generation over the next 12 months owing to active management of working capital and declining capital expenditure needs....

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