China gets a polyester prince with textile IPO
Hong Kong: A revival in China’s polyester industry has produced a new billionaire. Zhuang Kuilong, chairman of textile maker and distributor Xinfengming Group Co., saw his wealth surge almost 60% after its shares began trading on Tuesday in Shanghai.
The increase gave Zhuang, who owns 45% of the Tongxiang-based business, a net worth of at least $1.7 billion, according to the Bloomberg Billionaires Index. He owns the shares along with his wife and son, according to the company’s initial public offering prospectus.
Founded in 2000, Xinfengming is China’s second-largest polyester filament manufacturer by capacity, and sells its products across southeast China and in 12 countries globally, according to its website. The company had revenue of 17.5 billion yuan ($2.5 billion) in 2016, according to the prospectus.
Xinfengming’s shares jumped by the daily limit for the second session since their debut on Tuesday. The stock is up more than 58% at 42.26 yuan as of Wednesday.
Many Chinese polyester manufacturers are recovering from a recent period of overcapacity, Li Xuan, an analyst at China International Capital Corp. (CICC), said. Li said global demand for polyester fibre is expected to grow faster than the capacity of Chinese manufacturers, which is driving enthusiasm for the shares.
Most of the demand for polyester fibre comes from the production of apparel, garments and home furnishing by manufacturers based in China, India and southeast Asia, according to a November 2016 report from IHS Markit. China alone accounts for 65% of global consumption.
“The manufacturing capacity of the whole industry in China is rising at 3% per year,” Li said. “Global demand is growing at 5 to 6%, so we can see the Chinese polyester manufacturers are recovering in a positive direction from the overcapacity damage in 2015.”