Rontex International Holdings Limited
(Stock Code: 1142)

Major Shareholder:

• Mr. Cheung Keng Ching & his wife ¡V 61.8% interest

Company Subsidiaries:

• Rontex (H.K) (100%): Trading of garment products
• Ronco Trading (100%): trading of premium products and investment
• Take Luck (100%): Property holding and investment holding
• EverGold (100%): Provision of marketing and sales support services
• Rontex (Ningbo) (100%): Manufacture and sale of garment products
• Rontex (Beijing) (100%): Manufacture and sale of garment products
• Rontex (Jiayun) (100%): Manufacture and sale of garment products

The Group is principally engaged in the sourcing, manufacture, and sale of garments, principally woven wear, knitwear, and sweaters for men, to countries in South America, which include mainly Chile and Peru. A wide variety of garment products are sold by the Group, including jogging pants, woven jackets, woven pants, sports wear, sweat shirts, and T-shirts. The Group is also engaged in the trading of a variety of premium items, including baby items, party items, and leather belts to countries in South America (such as Chile, Argentina, Brazil, Paraguay, Peru, Columbia, and Ecuador) and Canada.

In view of the low manufacturing costs in the northern part of the PRC and the strong demand of garment products in the South American market, the Group established Rontex (Ningbo), a wholly foreign-owned enterprise, in August, 2000 to engage in the manufacture and sale of knitwear. It production facilities are located in Ningbo, Zhejiang Province. All of the garment products sold by the Group had been sourced from garment vendors before the commencement of the manufacturing process by Rontex (Ningbo) in December, 2001. Other than Rontex (Ningbo), the Group has made investments in two other manufacturing entities in the PRC: Rontex (Jiayun) and Rontex (Beijing) in 1999 and 2000, respectively, in order to gain initial manufacturing experience and to secure stable supply of garments.

For the year ended March 31, 2002, the Group's export of garments to Chile and Peru amounted to approximately $100.1 million and $12.7 million, respectively, representing approximately 88% and 11% of the Group's turnover derived from the sale of garments. The total import of knitted and woven garments into Chile and Peru from the PRC in 2001 amounted to approximately $1.7 billion and $109 million ¡V accordingly, the Directors believe that the Group is one of the largest exporters of PRC-manufactured knitted and woven garments to these two countries.

The Directors believe that the Group has the following competitive advantages:

• Over eight years of experience in the trading of garments to South America, where imports are subject to minimal or no controls
• Its long, established business relationship with its major customers in South America
• Its position as one of the major exporters of PRC-manufactured garments to South America
• Its low foreign exchange risk (the Group settles all sales in US dollars) and lack of bad debt over the previous three years ended March 31, 2002
• Its investments in a number of manufacturing entities in the PRC will provide a more stable supply of garments to satisfy part of the Group's demand and allow the Group to enjoy the benefit of the diversification of export markets to other countries such as Japan

• Reliance on key management ;
• Reliance on major suppliers;
• Reliance on major customers;
• Sustainability of profit margin;
• Change in customer base;

To enjoy a higher profit margin and to ensure a more stable supply of garments to satisfy the market demand anticipated by the Directors, the Group plans to increase its involvement in garment manufacturing and expand it production facilities by adding two new product lines ¡V cashmere jackets for men and women, and tailor-made men's suits ¡V while at the same time expanding production plants. The Director's believe that higher profit margin would be captured by diversifying into the higher end markets these two new product lines.

While South America will still be the principal market of the Group's products in the near future, the Group plans to explore business opportunities in other countries in order to enhance the production utilisation of the Group. The Group will recruit a team of four marketing personnel to approach garment buyers in other new target markets, such as Japan and Europe, to solicit buying orders. As at the Latest Practicable Date, the Group had already recruited two marketing managers for the Japanese and European markets each.

By expanding the production facilities of the Group, together with the years of experience in sourcing garments from its established network, the Directors believe that the Group is able to fully capture the business opportunity offered by the growth in the garment industry.

The net proceeds from the Placing, after deducting the related expenses, are estimated to amount to approximately HK$28.8 million (based on the offer price HK$1.00 per share). The Group at present intends to apply the net proceeds as follows: