My take on the privatisation proposal is that it will not go...

My take on the privatisation proposal is that it will not go through by June. My reasons are the following:

1. The textile industry is experience difficult trading conditoins lately due to above average input prices and below avarage terminal demand, the terminal demand is hard to pick up in the near future due to slowly declining house prices and relatively tight domestic credit, therefore the company is expected to have moderate NPAT for the coming FY, unless a major stimulus package kicks in to stimulate demand.

2. The competitiveness of Nylon 6 FDY is detoriating as polysters are eating up its market share. Polysters at half of Nylon's price can be a good substitute in some applications, though you can assume women's stockings will still be made fron nylon due to the latter's softness and silky feeling.

3. Our director has invested in other textile factories in China, not doing good either for the past 6 months, pyschologically it is hard for him to throw out big bucks himself at this point in time unless he made some decent profit somewhere in the next 12 months.

4. It is difficult to get domestic capital abroad and do privatisation, only certain financiers can help you with that, so limited financing options.

So the question now is whether it will go through eventually. Well, I guess it will when the cycle turns and the valueation arbitrage between industrial players across the ocean widens. The very fact that Oz investors don't appreciate this CN business is making a solid point for privatisation.