Decisive year for Xidelang

by **hlk** Thu 05 Jan 2012, 08:21

Xidelang Holdings Ltd’s controlling stakeholder Mark Ding Peng Peng is a disappointed man.

His company’s profit has been soaring over the past three financial years only for the shares to keep heading south.

“It
is a bit frustrating ... the investment community tells me that this
has a lot to do with perception of being a mainland China company,”
Ding, who is also the managing director of the company, told Business
Times in an interview.

He said since Muddy Waters Research
started scrutinising the accounts of mainland companies in the US,
Canada and Europe, managing perception has been a herculean task.

In June last year, Muddy Waters made international headlines after it accused China’s Sino Forest Corp of fraud.

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It was reported hedge fund manager John Paulson lost US$600 million
(RM1.88 billion) on his investment in the Chinese paper maker.

“Ever
since then, mainland companies have been painted in one brush. Look,
Xidelang is not a fly by night company. We have been here three years,
been profitable and have been building on a dividend track record,” said
Ding.

With this in mind, Ding says that 2012 will be a critical year for Xidelang in Malaysia.

“We
will try to increase investor relation activities here in Malaysia, and
make a decision on what we want to do with the company, going forward,”
said Ding.

He admits that awareness on Xidelang has been poor
with most investors still identifying the company as a shoemaker, when
its apparels are the company’s mainstay.

Xidelang is China’s
second largest maker of running and skateboard shoes but its sports
apparel business grew at a rate of 61.37 per cent from 2009 to 2010.

In
the year ended December 31 2010, the sports apparel business
contributed RM216.59 million to the group’s turnover of RM465.08
million.

Xidelang also has about RM134 million in cash while its book value comes in just under 60 sen.

Last year, the company’s share price fell by as much as 35 per cent to end 2011 at 29.5 sen.

Despite the setback, Xidelang has been making waves operation-wise.

From
a pre-tax profit of 65.06 million in 2008, it has increased to 106.78
million in 2010. Up to the nine months ended September 30 2011,
Xidelang’s pre-tax profit stood at RM84.52 million.

“We are expecting similar momentum this year,” said Ding.