Debt-funded expansion plans Narrow product range Relatively low profitability Good niche market position in core-spurn yarns Stable cash flow generation and relatively low leverage Track record of prudent financial management The rating on Texhong Textile Group Ltd. reflects the company's debt-funded expansion, its narrow product range, and relatively low profitability. These weaknesses are tempered by the company's good niche market position in core-spun yarns, its stable cash flow generation, and a track record of prudent financial management. Another supporting factor is the company's steady growth profile, driven by its expansion in Vietnam and above-average operating efficiency. We expect Texhong's debt-funded expansion to significantly increase its total borrowings over the next three years. The company aims to increase its production capacity
