MIRA INFORM REPORT

Report Date :

29.12.2014

IDENTIFICATION DETAILS

Name :	LUEN FUNG LEATHER FACTORY TRADING CO. LTD.
Registered Office :	Suite D-F, 27/F., West Gate Tower, 7 Wing Hong Street, Cheung Sha Wan, Kowloon
Country :	Hong Kong
Date of Incorporation :	16.08.1983
Com. Reg. No.:	08576673
Legal Form :	Private Limited Company.
Line of Business :	Importer and Exporter of all kinds of Raw Leather, Crust Leather and Finished Leather For Gloves, Bag and Luggage, Footwear, Furniture and Garment Industries; Tanning Chemicals as well as Industrial and Fashion Leather Gloves.
No of Employees :	13 (Hong Kong)

RATING & COMMENTS

MIRA’s Rating :

Ba

RATING		STATUS	PROPOSED CREDIT LINE
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory

Status :	Satisfactory
Payment Behaviour :	No Complaints
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 – September 30, 2014

Country Name	Previous Rating (30.06.2014)	Current Rating (30.09.2014)
Hong Kong	a1	a1

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

Hong Kong ECONOMIC OVERVIEW

Hong Kong has a free market economy, highly dependent on international trade and finance - the value of goods and services trade, including the sizable share of re-exports, is about four times GDP. Hong Kong levies excise duties on only four commodities, namely: hard alcohol, tobacco, hydrocarbon oil, and methyl alcohol. There are no quotas or dumping laws. Hong Kong's open economy left it exposed to the global economic slowdown that began in 2008. Although increasing integration with China, through trade, tourism, and financial links, helped it to make an initial recovery more quickly than many observers anticipated, it again faces a possible slowdown as exports to the Euro zone and US slump. The Hong Kong government is promoting the Special Administrative Region (SAR) as the site for Chinese renminbi (RMB) internationalization. Hong Kong residents are allowed to establish RMB-denominated savings accounts; RMB-denominated corporate and Chinese government bonds have been issued in Hong Kong; and RMB trade settlement is allowed. The territory far exceeded the RMB conversion quota set by Beijing for trade settlements in 2010 due to the growth of earnings from exports to the mainland. RMB deposits grew to roughly 9.1% of total system deposits in Hong Kong by the end of 2012, an increase of 59% from the previous year. The government is pursuing efforts to introduce additional use of RMB in Hong Kong financial markets and is seeking to expand the RMB quota. The mainland has long been Hong Kong's largest trading partner, accounting for about half of Hong Kong's exports by value. Hong Kong's natural resources are limited, and food and raw materials must be imported. As a result of China's easing of travel restrictions, the number of mainland tourists to the territory has surged from 4.5 million in 2001 to 34.9 million in 2012, outnumbering visitors from all other countries combined. Hong Kong has also established itself as the premier stock market for Chinese firms seeking to list abroad. In 2012 mainland Chinese companies constituted about 46.6% of the firms listed on the Hong Kong Stock Exchange and accounted for about 57.4% of the Exchange's market capitalization. During the past decade, as Hong Kong's manufacturing industry moved to the mainland, its service industry has grown rapidly. Growth slowed to 5% in 2011, and less than 2% in 2012. Credit expansion and tight housing supply conditions caused Hong Kong property prices to rise rapidly and inflation to rise 4.1% in 2012. Lower and middle income segments of the population are increasingly unable to afford adequate housing. Hong Kong continues to link its currency closely to the US dollar, maintaining an arrangement established in 1983.

Source : CIA

Company name

LUEN FUNG LEATHER FACTORY TRADING CO. LTD.

Company ADDRESS

Suite D-F, 27/F., West Gate Tower, 7 Wing Hong Street, Cheung Sha Wan, Kowloon, Hong Kong.

PHONE: 852-2414 6298 (6 lines)

FAX: 852-2411 0155

E-MAIL: fllhk@netvigator.com

MANAGEMENT

Managing Director: Mr. Tang Yau Choi

SUMMARY

Incorporated on: 16th August, 1983.

Organization: Private Limited Company.

Issued Share Capital: HK$300,000.00

Business Category: Leather Trading.

Employees: 13. (Hong Kong)

Main Dealing Banker: Bank of China (Hong Kong) Ltd., Hong Kong.

Banking Relation: Good.

Company ADDRESS

Registered Head Office:-

Suite D-F, 27/F., West Gate Tower, 7 Wing Hong Street, Cheung Sha Wan, Kowloon, Hong Kong.

Associated/Affiliated Companies:-

Alpha Metro Trading Ltd., Hong Kong.

Foshan Huimei Leather Co. Ltd., China.

Foshan Nanhai China-Hong Kong Leather Co. Ltd., China.

Foshan Nanhai Landscore Leather Co. Ltd., China.

Foshan Nanhai Lianfeng Leather Products Co. Ltd., China.

Guangxi Qinzhou China H.K. Leather Factory Co. Ltd., China.

BUSINESS REGISTRATION NUMBER

08576673

COMPANY FILE NUMBER

0127434

MANAGEMENT

Managing Director: Mr. Tang Yau Choi

Contact Person: Ms. Mandy Tang

ISSUED SHARE CAPITAL

HK$300,000.00

SHAREHOLDERS

(As per registry dated 16-08-2014)

Name		No. of shares
TANG Yau Choi		270,000
CHU Yat Yi		30,000
		–––––––
	Total:	300,000 ======

DIRECTORS

(As per registry dated 16-08-2014)

Name (Nationality)	Address
CHU Yat Yi (British)	Flat B, 6/F., Block 6, Skylodge, Dynasty Heights, 8 Yin Ping Road, Beacon Hill, Kowloon, Hong Kong.
TANG Yau Choi (Chinese)	Flat B, 6/F., Block 6, Skylodge, Dynasty Heights, 8 Yin Ping Road, Beacon Hill, Kowloon, Hong Kong.

SECRETARY

TANG Yau Choi (As per registry dated 16-08-2014)

HISTORY

The subject was incorporated on 16th August, 1983 as a private limited liability company under the Hong Kong Companies Ordinance.

Formerly the subject was located at Flat B, 2/F., Wah Lik Industrial Centre, 459-469 Castle Peak Road, Tsuen Wan, New Territories, Hong Kong, moved to G/F., 61-63 Portland Street, Yaumatei, Kowloon, Hong Kong in April 1996, and further to the present location in September 1999.

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

OPERATIONS

Activities: Importer and Exporter.

Lines: All kinds of raw leather, crust leather and finished leather for gloves, bag and luggage,

footwear, furniture and garment industries; tanning chemicals as well as industrial and fashion leather gloves.

Employees: 13. (Hong Kong)

Materials/Commodities: Mainly imports cowhide and sheepskin from Australia, New Zealand, USA and Europe.

Markets: Hong Kong, China and other countries.

Terms/Sales: Various terms.

Terms/Buying: L/C or 30 days credit.

FINANCIAL INFORMATION

Issued Share Capital: HK$300,000.00

Indebtedness: HK$32,841,916.57 (Total amount outstanding on all mortgages and charges as per last

Annual Return dated 16-08-2014)

Mortgage or Charge (since 2007): (See attachment)

Profit or Loss: Making a small profit every year.

Condition: Business is active and satisfactory.

Facilities: Making active use of general banking facilities.

Payment: Regularly met.

Commercial Morality: Satisfactory.

Bankers:-

Bank of China (Hong Kong) Ltd., Hong Kong.

Hang Seng Bank Ltd., Hong Kong.

Standing: Good.

GENERAL

Luen Fung Leather Factory Trading Co. Ltd. is a private limited company jointly owned by Mr. Tang Yau Choi, holding 90% interests, and Tang’s wife Ms. Chiu Yat Yi, holding 10%. Being Hong Kong merchants, they are also directors of the subject.

The subject is trading in the following commodities: Gloves - Industrial, Leather (Include OEM), Dress Gloves - Leather (Include OEM) & Leather (High quality cow hide for handbag & shoes accessories, including OEM).

The subject has had an associated company Alpha Metro Trading Ltd. [Alpha Metro] located at its operating address. Alpha Metro is also jointly owned by Tang and Chiu.

The subject’s factory known as Foshan Nanhai Lianfeng Leather Products Co. Ltd. [Nanhai Lianfeng] is a professional leather work gloves manufacturer and exporter in China. Products are exported to North American and European markets.

Besides Nanhai Lianfeng, Tang also has set up the following factories in China:-

· Foshan Huimei Leather Co. Ltd.

Foshan Nanhai China-Hong Kong Leather Co. Ltd.

Foshan Nanhai Landscore Leather Co. Ltd.

Guangxi Qinzhou China H.K. Leather Factory Co. Ltd.

All these firms belong to China-Hong Kong Leather Group. The Group has grown up to be a comprehensive group companies after over 20 years’ development. It is engaged in leather processing and trading, leather chemicals trading, leather products manufacturing, elevator repairing and manufacturing. Guangxi Qinzhou China H.K. Leather Factory Co. Ltd. was put into operation in January 2013. The total investment of this company was about HK$150 million. It is able to manufacture 500,000 dozens of leather gloves and process 600,000 pieces of cow hide. Now, this factory has about 1,000 employees.

Now the Group has the following subsidiaries:-

· Chengdu Liangang Leather Product Sales Department

Fu Tat Elevators Co. Ltd.

Guangzhou China-Hong Kong Leather Showroom & Sale Department

Landscore Leather Chemicals Ltd.

Landscore Leather Co. Ltd.

Wenzhou China-Hong Kong Leather Product Sales Department

These subsidiaries are wholly owned by the Group. In total, there are about 2,800 employees working in the Group’s subsidiaries. The Group’s annual output value is about RMB350 to 400 million Yuan. It is of high reputation in the leather industry both in China and Hong Kong.

Nanhai Lianfeng is a professional leather work glove manufacturer and exporter in China. Gloves are made of cow skin, pigskin, goatskin, sheepskin and even deerskin. Raw materials are imported from the United States, Germany, Brazil, Argentina, etc.

Nanhai Lianfeng was founded in 1995. Its factories have a total of 800 workers manufacturing 40,000 dozens of gloves per month.

According to the Group, it is able to manufacture non-toxic and environmental-friendly leather products.

Main customers of the Group are: LV, GUCCI, NIKE, Yearcon, KANGNAI, AOKANG, RED D AGONFLY, DISSONA, PELLETTERIA, COMICO, etc.

Prime markets are Australia, North America and Western Europe.

The subject is fully supported by the Group and managed by Tang and Chiu. History in Hong Kong is over 31 years and four months.

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

REMARKS:

Property information of the company:-

1. Property Location: Unit A on 6/F. of Block 6 (Skylodge 6) and Car Parking Space No. 68 on 2/F. underneath Block 1-6 (Skylodge 1-6), Dynasty Heights, 8 Yin Ping Road, Kowloon, Hong Kong.

Owner: Luen Fung Leather Factory Trading Co. Ltd.

Date of Purchase: n.a.

Purchased Price: n.a.

Incumbrances:-

Date of Mortgage	Amount Consideration	Mortgagee	Nature
08-08-2007	-	Bank of China (Hong Kong) Ltd., Hong Kong.	Mortgage to secure general banking facilities

2. Property Location: Unit B on 6/F. of Block 6 (Skylodge 6), Dynasty Heights,
8 Yin Ping Road, Kowloon, Hong Kong.

Owner: Luen Fung Leather Factory Trading Co. Ltd.

Date of Purchase: n.a.

Purchased Price: n.a.

Incumbrances:-

Date of Mortgage	Amount Consideration	Mortgagee	Nature
08-08-2007	-	Bank of China (Hong Kong) Ltd., Hong Kong.	Mortgage to secure general banking facilities

MORTGAGE OR CHARGE

(Since 2007)

Date	Particulars	Amount
08-08-2007	Instrument: Mortgage Property: 14/8,781st parts or shares of and in New Kowloon Inland Lot No. 5924 [Unit A on 6/F. of Block 6 (Skylodge 6) and Car Parking Space No. 68 on 2/F. underneath Block 1-6 (Skylodge 1-6) of Dynasty Heights, 8 Yin Ping Road, Kowloon, Hong Kong.] Mortgagee: Bank of China (Hong Kong) Ltd., Hong Kong.	All monies
08-08-2007	Instrument: Mortgage Property: 12/8,781st parts or shares of and in New Kowloon Inland Lot No. 5924 [Unit B on 6/F. of Block 6 (Skylodge 6) of Dynasty Heights, 8 Yin Ping Road, Kowloon, Hong Kong.] Mortgagee: Bank of China (Hong Kong) Ltd., Hong Kong.	All monies
21-12-2009	Instrument: Charge Over Securities (3-Parties) Property: The Chargor’s securities account number 286-466818-085 Mortgagee: Hang Seng Bank Ltd., Hong Kong.	To secure all monies in any currency owing by the Company and/or Alpha Metro Trading Ltd.
02-07-2013	Instrument: Charge Over Deposits/Securities (2 Parties) Property: The Chargor charges by way of first fixed charge to the Bank all the right, title and interest of the Chargor in and to the Charged Assets. Mortgagee: Hang Seng Bank Ltd., Hong Kong.	To secure owing all monies in any currency by the Company to Hang Seng Bank Ltd. at any time, actually or contingently, in any capacity, alone or jointly with any other person

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.63.64
UK Pound	1	Rs.98.98
Euro	1	Rs.77.74

INFORMATION DETAILS

Analysis Done by :	KAR
Report Prepared by :	MNL

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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This report is issued at your request without any risk and responsibility on the part of MIRA INFORM PRIVATE LIMITED (MIPL) or its officials.