Hendren Group is advising clients on Li & Fung, as the world’s largest supplier of toys and clothing sees a dramatic turnaround in business.
Hendren Group is a financial management and investment company dealing with investment methods and strategies. Based in Tokyo boasting a large base of private clients and a well skilled team of advisors, they conduct research and then subsequently develop short and long-term systematic approaches to achieving optimum returns on investments for themselves, their associates and for their current client base.
It has been a slow and arduous return to normal for suppliers within the retail markets after the largest consumer in the world the United States suffered economic down turn. Nevertheless, as figures for the largest supplier, Hong Kong based Li & Fung demonstrates the wait is ending. The company that is the principle supplier for U.S retail giants Target and Walmart has just experienced a record gain in share value of 9.5 percent, the largest recorded since 2011. This gain attributes to a return of normal contracts, primarily for the U.S market.
With some 60% of its business being driven by U.S demand, Li & Fung has undergone some key restructuring in order to maintain and increase operating profit where possible. The company has announced that these measures have been successful with operating profits for the first half, rising 1 percent to $232 million. Expectations that profits will rise further by 4 percent in the second half of the year is due in large to demand from consumers during the Holiday season and back to school period in the U.S.
“We are now seeing some very good signs regarding the global health of the retail sector, especially in the U.S and their benefits to suppliers in Asia are clear. Li & Fung being one of the largest in the sector suffered a lot of loss during the downturn, but their sheer size and scale has allowed them to weather it well and be in a position to capitalize as the situation returns to normal, throughout the course of the year we will see a number of companies regain their holding as consumer confidence returns, ” said David Holmes Senior Vice President of Mergers and Acquisitions at the Hendren Group.
Hendren Group are reassured as Li & Fung confirm that orders for the company are at 85 percent capacity and growing with strong signs that they will be once again at full manufacturing capacity by the end of 2014. The U.S unit, the hardest affected and most restructured asset is also expected to return to full supply capacity in the same period, with most analysts agreeing that the worst is now behind the sector.
Hendren Groups Senior Vice President David Holmes concluded, “Confidence is high across the board in regards to Li & Fung and the retail supply sector as a whole, showing a prosperous time for suppliers and manufacturers with consumer spending up in the first half of the year and the traditionally greater second half looming. We are often directing investors to companies that show such resilience through hard economic times as a sound investment vehicle, although a riskier approach, with thorough research and due diligence risk is minimized, by adding to a diversified portfolio and correctly managing the rewards are justified.”
Hendren Group is set to continue to advise clients to acquire shares within the Asian markets adding to successful diversified portfolios.