KBS Fashion Group Limited (NASDAQ:KBSF) probably didn’t plan on going into the weekend like this. By this, I mean witnessing its stock drop as much as 10%, one day after announcing a new long-term contract. If you’re interested in apparel manufacturing companies, you’re going to want to know the following.
What Happened, KBS Fashion Group?
On Thursday, KBS Fashion Group, which is a Chinese company, based primarily in the apparel industry, disclosed that its subsidiary has entered into a long-term strategic cooperation agreement with a leading Chinese producer of children’s apparel. Specifically, KBS Fashion’s Anhui Kai Xin Co., Ltd. has entered into a new long-term contract with Hangzhou Zhi Yin Apparel Clothes Co., Ltd. What’s going to come out of this strategic cooperation agreement? Well, according to KBS Fashion Group, the Kai Xin subsidiary will take on the role of a long-term supplier of down goose jackets to Hangzhou Zhi Yin.
Considering KBS Fashion Group is currently only involved in designing, selling, and marketing menswear, working with a leading producer of children’s apparel might be the thing needed to expand KBS’s resume. Therefore, this announcement should have been good news. After all, not only will it spice up the company’s resume, it is thought that because of the agreement, the casual menswear company will generate an additional FMB 25 million, which is roughly $4 million, of revenue in FY2018. However, it doesn’t appear the market agrees that this is good news. If they did, the stock would be seeing green, right? It’s not, though.
As of 12:52 EDT, KBS Fashion is trading at $6.51 on the Nasdaq Exchange. This puts the KBSF stock down $0.74, or 10.24%. The stock started the day trading at $7.41 and currently has a market cap of 11.64 million. There’s still some time in the trading day for stocks to make a comeback, but the KBSF stock doesn’t look like it’s going to stop dropping anytime soon.
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This isn’t the first announcement the company has made in 2018. In fact, KBS Fashion Group has been making quite a few over the past two months. At the end of January, the company announced that it would be having a senior management and directors change, and then a couple weeks later, named Keyan Yan as its new CEO and President.
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