Bra supplier eyes firm support for IPO

Lingerie fabrics supplier Best Pacific International – whose customers include Victoria’s Secret and Marks & Spencer – wants to float in Hong Kong.

China's Best Pacific International Holdings will try to raise as much as HK$625 million ($80 million) later this week by floating its shares in Hong Kong as it seeks to satisfy Asia's growing lust for lingerie.

Best Pacific – which supplies Marks & Spencer, Spanx and Victoria’s Secret with bra and other lingerie fabrics – is looking to price 250 million primary shares at between HK$1.85 and HK$2.50 to help fund its expansion.

The shares, which represent 25% of its capital, value the company at between HK$1.85 billion and HK$2.5 billion. CCB International is the lead bookrunner and the shares are expected to price on May 16. 

The initial signs are promising. Although there are no cornerstone investors, the institutional book was covered on the first day of the bookbuild, with demand coming from long-only funds, hedge funds and private banks, a banker familiar with the matter told FinanceAsia.

Best Pacific describes itself as a one-stop shop for global lingerie brand owners and manufacturers, operating elastic fabric, elastic webbing and lace product lines.

The company's revenues totaled HK$1.7 billion in 2013, a 21% improvement on both 2012 and 2011. Profits hit HK$244.5 million last year compared with HK$198 million in 2012 and HK$205.9 million in 2011.

More recently, Best Pacific also reported revenues of HK$387.5 million for the first quarter of 2014, a 24% improvement on the same period a year earlier.

Bra-vo! An expanding market

Already a supplier to a number of leading global bra manufacturers – in addition to Marks & Spencer, Spanx and Victoria’s Secret, it supplies Aimer, Chantelle, Embry Form, Maniform, Triumph and Wacoal – the company wants to boost its global market share, which stood at 2.3% in 2012.

The global lingerie market, which was worth an estimated $65.7 billion in 2012, is forecast to hit $82.1 billion in 2016, underpinned by improvements globally in living standards and growing demand for better quality products, according to consultancy firm Frost & Sullivan.

Frost & Sullivan forecasts that the lingerie market in China alone will grow at a compound annual growth rate of 16.7% from 2012 to 2016, reinforcing Best Pacific's growth ambitions.

“The global lingerie materials market is expected to be boosted by rising demand from the growing global lingerie market, especially in China,” Lu Yuguang, Best Pacific's chairman, said. “Therefore, we will increase our production capacity by purchasing additional machinery and building our ninth production facility to meet the increasing demand.”

Best Pacific plans on using the proceeds from its initial public offering to build a ninth production facility in Dongguan, with construction scheduled to start in 2015.

As well as expanding its lace division – a segment that tends to generate higher gross margins – Best Pacific has also branched out into sportswear material production, offering elastic fabrics and webbing to sportswear brand owners and manufacturers to product sports bars, cycling, running, yoga outfits and casual apparel.

Revenues globally for the elastic webbing used in lingerie totaled $1.6 billion in 2012 compared with $1.4 billion in 2008, estimates Frost & Sullivan, which sees them rising further to $2 billion by 2016.


Among the challenges facing Best Pacific is the potentially adverse impact on Chinese consumer demand of a slowing Chinese economy. Although some analysts argue that fears of a slowdown are overblown, lower-than-expected earnings results in China coupled with disappointing manufacturing data have recently weighed on local stock markets.

After hitting a 2014 high on April 10 of 23,186, Hong Kong’s blue-chip Hang Seng Index has fallen about 4% and is now down 5% year-to-date. China’s Shanghai Shenzhen CSI 300 Index, meanwhile, is down 6% so far this year.

Like other Chinese companies, Best Pacific is also vulnerable to any changes in the mainland government’s economic reforms, noting in its filing that any political instability, changes in laws and regulations, currency controls, and import/export restrictions or tariff alterations all had the potential to hurt its results.

The fact that it does not enter into long-term contracts with its customers also exposes Best Pacific to some revenue volatility.

¬ Haymarket Media Limited. All rights reserved.
Share our publication on social media
Share our publication on social media