Moody's downgrades Texhong

Moody's Investors Service said it downgraded Texhong Textile Group Ltd.'s corporate family and senior unsecured bond ratings to Ba3 from Ba2 following its weaker-than-expected profit in 2011.

The outlook was changed to negative from stable.

"Texhong reported a negative operating margin of 4.8% and a slow reduction in inventory during the second half 2011 due to weak demand for textiles and depressed cotton-yarn prices," Moody's vice president and senior analyst Jonathan Lee said in a news release.

"Moody's expects that Texhong's profitability will continue to be under pressure in the next 12 months, given the high likelihood of a continued slowdown in China's apparel exports and the intensifying price competition among yarn manufacturers in the domestic market," Lee added in the release.

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