MIRA INFORM REPORT

Report Date :

02.08.2011

IDENTIFICATION DETAILS

Name :	PROJECT STITCH (HK) LTD.
Registered Office :	Room 1001-1002, 10/F., Nanyang Plaza, 57 Hung To Road, Kwun Tong, Kowloon
Country :	Hong Kong
Date of Incorporation :	07.09.2007
Com. Reg. No.:	52195027
Legal Form :	Private Limited Company.
Line of Business :	Manufacturer, Importer and Exporter of all kinds of shirts, other garments, etc.

RATING & COMMENTS

MIRA’s Rating :

B

RATING		STATUS	PROPOSED CREDIT LINE
26-40	B	Capability to overcome financial difficulties seems comparatively below average.	Small

Status :	Satisfactory
Payment Behaviour :	Usually Correct
Litigation :	Clear

NOTES :

Any query related to this report can be made on e-mail : infodept@mirainform.com while quoting report number, name and date.

ECGC Country Risk Classification List – March 31^st, 2011

Country Name	Previous Rating (31.12.2010)	Current Rating (31.03.2011)
Hong Kong	a2	a2

Risk Category	ECGC Classification
Insignificant	A1
Low	A2
Moderate	B1
High	B2
Very High	C1
Restricted	C2
Off-credit	D

Company name

PROJECT STITCH (HK) LTD.

Company ADDRESS

Room 1001-1002, 10/F., Nanyang Plaza, 57 Hung To Road, Kwun Tong, Kowloon, Hong Kong.

PHONE: 2959 4300

FAX: 2148 4699

MANAGEMENT

Managing Director: Mr. Joerg Reiner Kornblum

SUMMARY

Incorporated on: 7th September, 2007.

Organization: Private Limited Company.

Capital: Nominal: HK$10,000.00

Issued: HK$1.00

Business Category: Manufacturer, Importer and Exporter.

Group Revenue: US$794,017,000 (Year ended 31-12-2010)

Group Employees: Over 27,000. (As at 31-12-2010)

Main Dealing Banker: The Hongkong & Shanghai Banking Corp. Ltd., Hong Kong.

Banking Relation: Satisfactory.

Company ADDRESS

Registered Head Office:-

Room 1001-1002, 10/F., Nanyang Plaza, 57 Hung To Road, Kwun Tong, Kowloon, Hong Kong.

Holding Company:-

On Time International Ltd., British Virgin Islands.

Ultimate Holding Company:-

Luen Thai Holdings Ltd., Cayman Islands/Hong Kong.

Associated/Affiliated Companies:-

Luen Thai Group of Companies

· Best Uni Ltd., Hong Kong.

· Consolidated Transportation Services (FSM) Inc., Pohnpei.

· Consolidated Transportation Services Inc. (Guam), Guam.

· Consolidated Transportation Services Inc. (Palau), Palau.

· Consolidated Transportation Services Inc., Commonwealth of Northern Mariana Islands.

· CTSI Holdings Ltd., British Virgin Islands.

· CTSI Logistics (Korea) Inc., Korea.

· CTSI Logistics (Taiwan) Inc., Taiwan.

· CTSI Logistics Inc., Cambodia.

· CTSI Logistics Inc., USA.

· CTSI Logistics Ltd., Hong Kong.

· CTSI Logistics Phils. Inc., Philippines.

· Desk Top Bags (Mfg) Ltd., British Virgin Islands.

· Desk Top Ltd., Hong Kong.

· Dongguan Luen Thai Garment Co. Ltd., China.

· Dongguan Quan Thai Garment Co. Ltd., China.

· Dongguan Xing Hao Handbags Factory Co. Ltd., China.

· Dongguan Xingxi Handbags Factory Co. Ltd., China.

· Fortune Investment Overseas Ltd., British Virgin Islands.

· G.J.M. (H.K.) Manufacturing Ltd., Hong Kong.

· GJM (HK) Ltd., Hong Kong.

· GJM (Qingyuan) Light Industrial Development Ltd., China.

· GJM (UK) Ltd., UK.

· Glory Silk International Ltd., British Virgin Islands.

· Gold Chain Enterprise Ltd., Hong Kong.

· Golden Dragon Apparel Inc., Philippines.

· Guangzhou G.J.M. Garment Manufacturing Factory, China.

· Hong Kong Guangthai International Co. Ltd., Hong Kong.

· Hongquan Consulting Services (Shenzhen) Co. Ltd., China.

· Kingsmere Inc., USA.

· L & T International Group Phils. Inc., Philippines.

· Lian Xin Garment Co. Ltd., China.

· LT Investment Co. Ltd., Cambodia.

· Luen Tai International Group Ltd., Hong Kong.

· Luen Thai (Qingyuan) Real Estate Ltd., China.

· Luen Thai Macao Commercial Offshore Co. Ltd., Macau.

· Luen Thai Overseas Ltd., Bahamas.

· Manhattan Ltd., Hong Kong.

· New Sunshine Ltd., Hong Kong.

· P.T. Buena Intisari Garment, Indonesia.

· P.T. Cedrateks Indah Busana, Indonesia.

· P.T. Eka Sandang Duta Prima, Indonesia.

· Partner Joy Group Ltd., British Virgin Islands.

· Philippine Luen Thai Holdings Corporation, Philippines.

· Power Might Ltd., British Virgin Islands.

· Project Stitch Ltd., British Virgin Islands/Hong Kong.

· Qingyuan Liantou Properties Ltd., China.

· Shenzhen Guanghai International Co. Ltd., China.

· Shenzhen Li Da Silk Garment Co. Ltd., China.

· Sino Venus Ltd., Hong Kong.

· Sunny Force Ltd., British Virgin Islands.

· Tellas Ltd., USA.

· Texcorp Investments Ltd., Hong Kong.

· Tien-Hu Knitters Ltd., Hong Kong.

· Tien-Hu Knitting Factory (Hong Kong) Ltd., Hong Kong.

· Tien-Hu Trading (Hong Kong) Ltd., Hong Kong.

· TMS Fashion (H.K.) Ltd., Hong Kong.

· TMS International Ltd., Hong Kong.

· Trinew Ltd., British Virgin Islands.

· Victory Land Properties Ltd., Hong Kong.

· Wuxi Liantai Garments Co. Ltd., China.

· Yuen Thai Holdings Ltd., British Virgin Islands.

· Yuen Thai Industrial Co. Ltd., Hong Kong.

· Yuenthai Philippines Inc., Philippines.

etc.

BUSINESS REGISTRATION NUMBER

52195027

COMPANY FILE NUMBER

1165326

MANAGEMENT

Group Chief Executive Officer & President: Mr. Henry Tan

Managing Director: Mr. Joerg Reiner Kornblum

CAPITAL

Nominal Share Capital: HK$10,000.00 (Divided into 10,000 shares of HK$1.00 each)

Issued Share Capital: HK$1.00

SHAREHOLDER

(As per registry dated 07-09-2010)

Name	No. of share
On Time International Ltd. P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands.	1 =

DIRECTORS

(As per registry dated 07-09-2010)

Name (Nationality)	Address
Frank Hermann FLEISCHER	65 Ocean Drive, Sentosa Cove, Sentosa, 098358 Singapore.
Joerg Reiner KORNBLUM	House F, Pan Long Villa, 22 Hang Hau Wing Lung Road, Clearwater Bay, Kowloon, Hong Kong.
TAN Cho Lung, Raymond	Flat 4, 17/F., Block B, Fontana Gardens, Causeway Bay, Hong Kong.
Henry TAN	Flat A, 18/F., Trafalgar Court, 70 Tai Hang Road, Hong Kong.

SECRETARY

(As per registry dated 07-09-2010)

Name	Address	Co. No.
Snap Services (H.K.) Ltd.	Room 303, 3/F., St. George’s Building, 2 Ice House Street, Central, Hong Kong.	0138615

HISTORY

The subject was incorporated on 7th September, 2007 as a private limited liability company under the Hong Kong Companies Ordinance.

Originally the subject was registered under the name of Marina Enterprise Holdings Ltd., name changed to the present style on 14th April, 2010.

Apart from these, neither material change nor amendment has been ever traced and noted.

OPERATIONS

Activities: Manufacturer, Importer and Exporter.

Lines: All kinds of shirts, other garments, etc.

Group Employees: Over 27,000. (As at 31-12-2010)

Materials/Commodities: Imports raw materials from European countries, some Asian countries and finished

products from China.

Markets: Japan, Australia, North America, Europe, etc.

Group Revenue: US$800,877,000 (Year ended 31-12-2007)

US$832,002,000 (Year ended 31-12-2008)

US$774,892,000 (Year ended 31-12-2009)

US$794,017,000 (Year ended 31-12-2010)

Terms/Sales: L/C or as per contracted.

Terms/Buying: L/C, D/P, etc.

FINANCIAL INFORMATION

Nominal Share Capital: HK$10,000.00 (Divided into 10,000 shares of HK$1.00 each)

Issued Share Capital: HK$1.00

Group Net Profit: US$20,405,000 (Year ended 31-12-2007)

US$23,173,000 (Year ended 31-12-2008)

US$19,007,000 (Year ended 31-12-2009)

US$19,263,000 (Year ended 31-12-2010)

Profit or Loss: Making a small profit every year.

Condition: Keeping in a satisfactory manner.

Facilities: Making fairly active use of general banking facilities.

Payment: Met trade commitments as required.

Commercial Morality: Satisfactory.

Banker: The Hongkong & Shanghai Banking Corp. Ltd., Hong Kong.

Standing: Normal.

GENERAL

Project Sittch (HK) Ltd. is a wholly-owned subsidiary of On Time International Ltd. [On Time] which is a BVI-registered firm. On Time is an investment holding company in Hong Kong, and is a 60%-owned subsidiary of Luen Thai Holdings Ltd. [Luen Thai], a Cayman Islands-registered firm.

Located at the same operating office, the subject has got an associate Project Stitch Ltd. which is also 60%-owned by Luen Thai.

Luen Thai together with its subsidiaries (collectively the “Luen Thai Group”) is one of the leading apparel and accessories manufacturing and supply chain services providers worldwide. It has close partnership with brands and retailers globally, which include adidas, Coach, Dillard’s, Esprit, Fast Retailing, Limited Brands, Polo Ralph Lauren and Targus among others. It produces approximately 74 million pieces of garments and accessories annually with products ranging from casual wear, ladies’ wear (career, intimate and fashion wear), sports and active-wear, sweaters, outerwear, children’s wear and laptop bags, luxury and fashionable bags.

Luen Thai is a global leader in providing end-to-end apparel services that support its customers’ speed-to-market goals. It operates sales and designing offices, manufacturing facilities and logistics stations in Asia, America and Europe.

Since 2002, Luen Thai has embarked on a string of selective acquisitions to further build its multi-product capability. These include Glynn and Jacquelyn Manson [GJM], Tomwell Ltd. and Tien Hu. Joint ventures were also made with industry giants such as Yue Yuen, TMS, Tien-Hu Group and Guangdong Foreign Trade Group Co. Ltd.

In July 2004, Luen Thai was listed on The Stock Exchange of Hong Kong Ltd. bearing stock code 311, and had become the holding company of the Luen Thai Group. The latest partnership involves Desk Top to produce laptop bags, fashion bags, backpacks, etc.

Luen Thai entered into an agreement to acquire 50% stake in On Time and its subsidiaries (collectively the “On Time Group”) on 10th March, 2006. The subject is also a member of the On Time Group.

On Time Group is principally engaged in the design, sourcing and distribution on a worldwide basis of garments and other textile products. Established in the early 1990s, its headquarter is located in Hong Kong with offices in Asia Pacific. The acquisition is able to further enhance Luen Thai’s design capabilities, which along with its production scale, speed up turnaround times and bring in more European business to the Group.

In April 2007, Luen Thai Group exercised the call option to acquire an additional 10% interest in On Time, a subsidiary from the minority shareholder at an estimated consideration of approximately US$4,553,000 and consequently a goodwill of approximately US$2,308,000 has been recognized. Since then, Luen Thai Group has been holding 60% interests of the subject.

For the year ended 31st December, 2010, the Luen Thai Group’s revenue increased by 2.5% to approximately US$794,017,000 when compared to 2009. The increase in revenue is mainly due to the increase in business with certain customers, particularly those under the Accessories Division amid the gradual stabilization of the global economy.

Luen Thai’s overall gross profit for 2010 was approximately US$134,335,000, representing an decrease of 6.1% over 2009. The overall gross profit margin in 2010 was approximately 16.9% as compared to 18.5% in 2009. The decrease in gross profit margin was mainly due to the constant rise in raw material costs, in particular the increase in the world cotton price. The Group’s operating expenses (including the selling and distribution expenses and the general and administrative expenses) decreased from US$127,035,000 in 2009 to approximately US$113,959,000 in 2010, representing a decrease of 10.3% over 2009 as a result of its continuous success in certain cost cutting initiatives.

The significant increase in finance income during the FY 2010 was mainly due to the de-recognition of financial liabilities as a result of the termination of an option deed entered into with one of the Group’s joint venture partners back in 2006 relating to the joint venture business in On Time.

The profit attributable to the owners of the Group increased to US$18,052,000 as compared to US$15,220,000 in 2009.

Apparel businesses, comprising the Group’s Causal and Fashion Apparel Division, Sweater Division and Life Style Division, accounted for approximately 81.6% of the Group’s total revenue in 2010. These apparel businesses include the Group’s OEM garment manufacturing, garment sourcing and trading. The challenges that the apparel businesses were facing in 2010 were mainly the fluctuation of Euro, the increase in raw material price as a result of the increasing cotton price and the increase in labour costs. Ladies fashion and intimate apparel remain to be the leading segment contributor within the Casual and Fashion Apparel Division, registering strong revenue and profit for the year of 2010.

The Luen Thai Group has over 27,000 employees worldwide.

The subject is fully supported by the Luen Thai Group.

On the whole, consider the subject good for normal business engagements.

REMARKS:

Brief personal history of the principal director:-

Mr. Henry TAN, BBS, JP, aged 57, is the Chief Executive Officer and President of the Group and son of Dr. Tan Siu Lin, the founder and Chairman of the Group. Mr. Tan is also a member of the Remuneration Committee and the Bank Facility Committee. Mr. Tan joined the Group in January 1985 and has over 26 years of experience in apparel and logistics industries. Mr. Tan is also an Independent non-executive director of Kingboard Chemical Holdings Ltd. Mr. Tan acts as committee member of the Chinese People’s Political Consultative Conference in Fujian and the member of Standing Committee of the Chinese People’s Political Consultative Conference in Qingyuan City of Guangdong Province. Mr. Tan also acts as the executive vice chairman of China Council for the Promotion of Peaceful National Reunification of Hong Kong Region, vice president of Overseas Chinese Economic and Cultural Foundation of China, member of Garment Advisory Committee of Hong Kong Trade Development Council and the council member of Huaqiao University. Mr. Tan is the past Chairman of Po Leung Kuk, an authorized charity organization in Hong Kong. Mr. Tan obtained his Master’s degree in Business Administration and Bachelor’s degree in Business Administration from the University of Guam.

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.44.05
UK Pound	1	Rs.72.40
Euro	1	Rs.63.46

RATING EXPLANATIONS

RATING		STATUS	PROPOSED CREDIT LINE
>86	Aaa	Possesses an extremely sound financial base with the strongest capability for timely payment of interest and principal sums	Unlimited
71-85	Aa	Possesses adequate working capital. No caution needed for credit transaction. It has above average (strong) capability for payment of interest and principal sums	Large
56-70	A	Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums	Fairly Large
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory
26-40	B	Capability to overcome financial difficulties seems comparatively below average.	Small
11-25	Ca	Adverse factors are apparent. Repayment of interest and principal sums in default or expected to be in default upon maturity	Limited with full security
<10	C	Absolute credit risk exists. Caution needed to be exercised	Credit not recommended
----	NB	New Business	----

This score serves as a reference to assess SC’s credit risk and to set the amount of credit to be extended. It is calculated from a composite of weighted scores obtained from each of the major sections of this report. The assessed factors and their relative weights (as indicated through %) are as follows:

Financial condition (40%) Ownership background (20%) Payment record (10%)

Credit history (10%) Market trend (10%) Operational size (10%)

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