• Mr. Tai Chin Chun and Madam Cheung So Wan- 60% interest
• Mr. Tai Chin Wen and Madam Wong Siu Yuk- 15% interest

Company Subsidiaries:

The Group is principally engaged in the manufacture and sale of finished knitted fabrics. During the Track Record Period, the Group¡¦s merchandise was sold to various garment manufacturers, many of whom are suppliers to international fashion appeal brand operators that sell garment products to the customers in the US and other countries. Apart from knitting and dyeing for its own sale, the Group has occasionally provided knitting and dyeing services for other fabric manufacturers.

The Group-s production facilities are located in Panyu, Guangdong, the PRC. The annual knitting and dyeing capacities of the Group were approximately 74.4 million pounds and 101.5 million pounds respectively.

Equipped with vertically integrated production facilities, the Group is able to handle a wide range of fabric production procedures including fabric knitting, dyeing, setting and finishing. The Group is therefore capable of producing a variety of finished knitted fabrics to meet its customers¡¦ different specifications and requirements.

The Directors believe that the Group is capable of carrying on its business independently and its success is attributable to the following principal factors:

• The Group¡¦s economies of scale and well-organized production facilities in Panyu, the PRC;
• Well-established relationships with garment manufacturers and certain international fashion apparel brand operators;
• The Group¡¦s commitment to maintaining and improving its product quality and its ability to provide a variety of products;
• Extensive experience and expertise of the Group¡¦s management team in the textile industry;
• Fine and skilful workmanship; and
• Well-established relationship with suppliers of raw materials.

With the expected increase in demand of consumer goods in the US, as well as the considerable development growth potential in the PRC textile market, the Directors believe that the Group is well positioned to capture the world¡¦s fabric market and to further develop new market opportunities leveraging on its scalable production base, high product quality and wide-ranging product categories.

Because of its stringent quality control procedures, the Group did not have any material sales returns due to defects from its custoemrs during the Track Record Period and has established itself as a reliable manufacturer of quality knitted fabrics.

The Directors believe that the market demand for knitted fabrics will continue to grow and the Directors also anticipated that the worldwide quota on textile products will gradually be removed upon the PRC¡¦s entry into WTO. In light of this favourable business environment, the Group¡¦s objective is to become a leading knitting fabric manufacturers in South East Asia, offering a wide series of quality knitted products in different markets.

• Further vertical integration

The Group intends to apply approximately HK15 million from the net proceeds of the Share Offer for the purchase of additional yarn dyeing machinery. The Directors believe that the establishment of new yarn dyeing operation will benefit the Group by reducing production unit cost, improving quality control and reducing production lead time. Moreover, the newly established yarn dyeing facilities will enable the Group to offer a wider product range to its customer.

Apart from the yarn dyeing operation, the Directors may in the future consider other up-stream vertical integration alternatives including, but not limited to, the spinning of cotton yarn.

• Expansion of the production capacity

The Group intends to expand its production capability by constructing additional factory premises and purchasing new machinery so that it will be bale to accept more orders and reduce production lead time.

• Installation of an additional power and steam generator

In consideration of the expected increase in future production capacity, the Directors intend to install a 18,000 KW additional power and steam generator, which is expected to start operation in mid-2005

• Market expansion

With the liberalization and globalization of the garment industry, the Directors believe that the North American sector of the industry will continue to be promising and that the PRC market will offer tremendous development potential. The Group will continue to consolidate relationships with existing customers in Singapore, Taiwan and Hong Kong and has identified Korea and Europe as its next strategic locations for expansion. The Group has established Kam Sing, a wholly-owned subsidiary, with a view to developing the domestic knitted fabric market in the PRC. The Group plans to further expand its distribution network by establish sales points in these identified locations and by strengthening its sales and marketing team.

RISK FACTORS

• Risks relating to the Group
• Reliance on major customers
• Reliance on sales to major regions
• Reliance on major suppliers
• Possible disruption in the supply of, or price fluctuations for, the Group's raw materials
• Reliance on key management
• Reliance on production facilities in the PRC
• Properties
• Taxation
• Seasonal factors
• Consolidation of financial results of Panyu Kam Hing Textile Dyeing Company Limited and Guangzhou Kam Sing Textile and Dyeing Company Limited
• Differences in accounting standards
• Debt-to-equity ratio

Based on an Offer Price of HK$1.37 per Offer Share (being the mid-point of the Offer Price range between HK$1.13-1.61 per Offer Share), the net proceeds of the Share Offer, assuming that the Over-allotment Option is not exercised and after deducting the expenses payable by the Company, are estimated to be approximately HK$203 million. At present, the Directors intends to apply the net proceeds as follows:

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