Outlook

After the successful listing of the shares of the Company (the “Shares”) on The Stock Exchange Hong Limited (the “Stock Exchange”), the Group continues to carry out its vertical integration strategy by and developing a one-stop business portfolio of knitting, dyeing and textile trading, which complement each other and create synergy that substantially improves the Group’s production capacity and competitiveness.

With the successful conclusion of textile negotiations between China, Europe and the US, uncertainties from the sustained pressure imposed on China’s textile products have been removed. As a result, international merchandisers have been placing huge orders with suppliers possessing robust production capacity and reputation. In view of such international trend and the market situation, the Group agreed to invest RMB50 for the construction of a large-scaled knitting mill for sweaters in Wuzhou, Guangxi Province on 13th December, 2005 and US$10 million in a 50,000-spindle expansion project of Susong Spinning Mill in Anqing on 30th December, 2005. Continual enhancement of production facilities is critical for achieving the Group’s overall competitiveness.

Susong Spinning Mill is the spinning arm of the Group and the new investment made in Anqing will allow Group to enhance its existing production facilities and to produce more high quality cotton yarn to keep abreast of the development of spinning in the PRC. In view of the increasing demand from its overseas and domestic customers for the Group’s knitted sweaters and in order to reduce its reliance on subcontractors, the Group an investment in Wuzhou for the continual expansion of its knitted sweaters production facilities.

The Group believes that the above new facilities will facilitate the development of the Group, regain of momentum in terms of our sales and bring long term benefits to the Group. Every member of the Group will unite its efforts and strive for satisfactory returns for the shareholders.