Xuzhou_plant11.14Asia Fashion's Xuzhou plant has production capacity of over 1.5 billion units. Photo: CompanyWILL ASIA FASHION's new business turn out to be a sizzler over the long term?

There are signs pointing to it.

The SGX mainboard-listed company's new lease of life centres on its proprietary "high-tech and eco-friendly magnesium-based multifunctional construction board".

It contributed its maiden three-month (July-Sept 2014) revenue of RMB134.3 million. Coupled with RMB33.2 million from its legacy fabric business, Asia Fashion reported total 3Q revenue of RMB167.5 million.

Its new construction materials business came with a handsome gross margin of 33.8%.

As a result, Asia Fashion’s core operating profit improved to RMB36.7 million in 3Q2014 from RMB18,000 a year ago, excluding a one-off gain in 3Q2013.

Net profit after tax was RMB23.3 million (in 3Q2014), translating into earnings per share of 1.5 RMB cents.

Mr Neo Chee Beng, Executive Chairman of Asia Fashion, was effusive over the prospects of the new materials business, calling it "our revolutionary, high-tech new material that possesses superior properties like no other in the market."

He added: "We are highly positive of its potential to disrupt the construction material market and become an incomparable leader in the field. Buoyed by the encouraging results and optimistic outlook, we are confident of generating further growth and value for the Group.”

Asia Fashion's press release yesterday dwelt at length on what this "new materials" business is about:

collage_10.14Asia Fashion's new business produces cost-effective boards that are sound-proof for auditoriums (top left), fire-safe for public buildings (top right), water-proof for toilets (bottom left), and lightweight for false ceilings (bottom right).

"... the new material business uses its proprietary technologies to create a whole new multi-functional interior and exterior material. Encompassing superior material properties as compared to existing products, the new material is eco-friendly, highly durable, fire-proof, water-proof and sound-proof.

"Despite the high-tech and high-quality features, the new material has low resource and energy consumption and is at a lower cost as compared to the existing popular materials in the market.

"With a production capacity of over 1.5 billion units from its 86,700 square metre manufacturing plant in China, the new material business supplies to strategic partners with large scale engineering projects, such as China’s largest non-state owned petrochemical group, Ningxia Baota Petrochemical Group, and multinational clean energy company, Hanergy Holdings Group Ltd."

For more details, see the company's Powerpoint materials on the SGX website.

Recent story: ASIA FASHION: 3QFY2014 Results To Show Significant Improvement

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