Moody's: Texhong unchanged

Moody's Investors Service said Texhong Textile Group Ltd.'s financial results for January through June were generally in line with expectations and have no immediate impact on the company's Ba2 issuer and senior unsecured bond ratings.

The outlook remains stable.

Texhong's nearly 16% year-on-year decline in net profit in the first half of 2011 was mainly due to decreased sales of low-count cotton yarn and denim yarn, Moody's said.

The agency said it expects that profitability in the second half of 2011 will be weaker than the second half of 2010 due to the delivery of high-priced cotton according to contracts set in 2010 and lower average selling prices for its main products when compared to 2010.

But such high-priced cotton feedstock will be fully consumed in the remaining months of 2011 and will unlikely cause any permanent impairment to Texhong's financial position, which is not forecast to be weaker than that in 2008-2009, Moody's said.

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