On April 19, Zhitong Finance learned that the functional knitted fabric supplier Zhifang International Holdings Co., Ltd. (hereinafter referred to as Zhifang International) recently submitted an application for listing on the GEM. The proceeds are intended to be used to strengthen sales, establish new research and development centers, and improve product testing facilities.

The functional knitted fabrics produced by Zhifang International are divided into two categories: warm fabrics and cool fabrics. As of March 31, Zhifang International has four registered patents in the production technology and printing and dyeing process of functional knitted fabrics, and has submitted four patent registration applications. Among the four registered patents, three are invention patents. In addition to fabrics, Zhifang International also sells clothing made of functional knitted fabrics.

According to Zhitong Finance, Zhifang International, headquartered in Dongguan City, has set up three offices in Hong Kong, Beijing and Shanghai to cover the North, Central and South China markets. Its products are mainly sold directly to underwear and apparel brands, sourcing agents and apparel manufacturers, including high-end underwear brands Aimer and Boni.

Among them, Aimer underwear is the largest customer of Zhifang International. In 2015 and 2016, revenue from Aimu accounted for 61.2% and 25.5% of the group's total revenue in the same period.

The research report of Zhuzhi Consulting shows that functional fabrics are currently favored by the underwear market because of their antibacterial and skin care functions. From 2012 to 2016, the consumption of underwear functional knitted fabrics increased at a compound annual growth rate of 15.7%.

Benefited from the expansion of the market, Zhifang International's performance has also risen sharply. From 2015 to 2016, Zhifang International’s revenue was approximately 64.104 million and 80.25 million, an increase of 25% year-on-year; gross profit margin was approximately 36.1% and 43.9%; profit attributable to company owners was approximately 12.05 million, 18.895 million, an increase of 56.8% year-on-year.

It can be seen from the above data that in 2016, the group's net profit growth rate was higher than its revenue, mainly due to a 7.8% increase in gross profit margin. The increase in gross profit margin was mainly due to the decline in the purchase price of major raw materials such as acrylic fiber.