RE: Top up23 May 2019 21:25
Sorry that didn't work! Nice article in uk investor
Founded in 1961 AIM listed Bagir Group Ltd is a maker of innovative tailored garments for men and women throughout the world. Their clothes are sold by leading private retail labels and under well-known retail brands such as H&M and Brooks Brothers. If you have ever bought a suit from either of those stores there is a good chance Bagir made it.
Bagir has had its fair share of troubles in recent times which began with the loss of Marks & Spencer back in 2014. At the time Marks & Spencer was its largest customer and revenues and margins have struggled since the loss.
With the end of the month approaching Bagir looks set to finally turn the corner and put the recent turmoil behind it. Back in November 2017 Bagir announced a Strategic Partnership with Chinese based Shandong Ruyi one of the world’s largest textile manufacturers. As part of the Strategic Partnership Shandong Ruyi is set to invest $16.5 million to acquire c.54%1 of Bagir’s enlarged share capital at a price of 3.5p per share. Although the Strategic Partnership was announced back in 2017 due to regulatory delays (a common occurrence in China) the deal has yet to close. All regulatory hurdles related to the deal have now been passed and all other conditions have been completed, all that Bagir is waiting for now is for Shandong Ruyi to make the final payment following that the deal will be closed, the deadline for completion is the 30th of May so the deal is expected to close imminently.
The Strategic Partnership will be transformational for Bagir as it vastly improves its ability to compete and win major apparel manufacturing contracts from the world’s largest retailers. Shandong Ruyi has been on an acquisition spree of late as it looks to transform itself from a textile manufacture into a global provider of affordable luxury, the opportunity is there for Bagir to become a key supplier to many of Shandong Ruy’s purchased brands.
The regulatory delays which held up the strategic partnership have presented a significant opportunity for investors, with Bagir’s share price currently hovering around the 2p mark it’s still well below Shandong Ruyi’s purchase price of 3.5p. Even at 3.5p Bagir still looks significantly undervalued, if as widely expected contracts start to flow through from Shandong Ruyi’s partner companies I would expect the share price to re-rate significantly and they could certainly be headed back towards the pre Marks & Spencer loss prices.
You may ask if Shandong Ruyi are buying in at 3.5p why do the shares currently sit at 2p, I believe the current undervaluation exists because the market had doubts that the deal would actually close and the longer the delay dragged on the more worried investors became. But as per recent announcements these doubts have now been eased, with all the conditions of the deal now completed it’s now simply ju
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