Taiwan’s TST Group to expand into apparel sewing in Cambodia amid viral crisis

04, Mar. 2020

Photo by Elijah O'Donnell on Unsplash
Photo by Elijah O'Donnell on Unsplash

TAIPEI, NNA – Major textile maker TST Group Holding Ltd. is branching out into apparel sewing from textile manufacturing in Cambodia with a planned investment of $20 million in a bid to diversify its businesses.

The Hong Kong-based company, which supplies fabrics for brands such as Adidas, Puma and Gap, plans to establish a joint venture with a Singapore-registered local partner, and hold a 51 percent stake in it, a TST Group spokeswoman told NNA on Tuesday.

The Taipei-listed group aims to step up its vertically integrated production of textiles and apparel in Cambodia. Top Sports Textile Ltd., a subsidiary in Cambodia, runs a plant for fabric weaving and dying processing.

TST Group says the move is in response to demand from clients and it will draw up a detailed investment plan in the second half of this year. Apparel production is scheduled to be launched in the second half of 2021, President Jeff Lin was quoted by Taiwan’s Central New Agency as saying.

Amid ongoing supply chain disruption in China due to the coronavirus outbreak, the company “always plans to diversify and increase overseas businesses, and the Covid-19 epidemic even pushed us to accelerate our efforts,” the spokeswoman said.

It expects the Cambodian apparel production to generate fresh monthly revenue of 300 million New Taiwan dollars ($9.9 million) by gaining new clients, she added.

TST Group is looking for other merger opportunities in Southeast Asia in the future and hopes to more than double its annual group revenue in 2022 to NT$14 billion, she said without elaborating.

Separately, the group will begin shipping thicker fabrics to its new client Nike Inc. for making hoodies in April, which could bring a 5 percent increase in group revenue this year and double-digit growth next year as its supplies to the U.S. brand expand, according to the spokeswoman.

“We recognize declining demand from China amid the virus outbreak but orders from Western brands to us have remained unaffected,” the president said in the report.

The group has operations in China, Hong Kong and Cambodia, delivering roughly 30 percent of its products to clients in mainland China, such as sport wear brand Li-Ning, he said.

Despite potential supply shortages of dying agents, the group secures such stocks equivalent for a period of six months, the president said in the CNA report.

It sources 40 percent of yarns from China and the remaining 60 percent from Vietnam, according to the spokeswoman.

If the epidemic can be contained in the second quarter, then it is still upbeat about the group’s annual performance, Lin added in the media report.

The company logged monthly revenue of NT$425.5 million in January, a 16.6 percent drop on year, according to its latest financial filing with the Taiwan Stock Exchange.

On a yearly basis, the coronavirus outbreak is estimated to reduce the group’s revenues by 10 percent, the spokeswoman said.