China Linen Textile Industry Ltd. (CTXIF.OB) Acquires Lanxi Tianxianfang Linen Co. Ltd.

QualityStocks would like to highlight China Linen Textile Industry, Ltd. (OTCBB: CTXIF). The company is principally engaged in the production and sale of linen yarn and various types of linen fabric. They are also involved in consultation and R&D related to linen technology and linen products. China Linen carries on all of its business activities through its subsidiary, Heilongjiang Lanxi Sunrise Linen Textile Industry Co., Ltd. ("Lanxi Sunrise"), established in June 2002 and located in Lanxi County, the "Homeland of Flax in China," near Harbin City in China.

In the company’s news Friday,

China Linen Textile Industry announced that it has acquired a 100% equity interest in Lanxi Tianxianfang Linen Co., Ltd. The acquisition, valued at approximately $6.7 million, will expand the capacity of the company’s two main product lines. The acquisition will also function as a way to help China Linen meet its growing customer demand. This acquisition is expected to add approximately $4.9 million in revenue and $1.2 million in net income annually, while maintaining gross margins of approximately 30%.

The acquisition includes a 23,358 square foot office building, a spinning production line with 3,000 spindles, bleaching machines and other equipment. China Linen has been operating in Tianxianfang’s facility since July 1, 2010, when the companies entered into a fixed asset lease agreement. The acquisition will increase the Company’s line yarn production capacity by approximately 39% to 2,220 tons annually, and will increase the linen fabric production capabilities by about 26% to 10.2 million meters annually.

“We are very excited to announce the acquisition of Tianxianfang, an important milestone in our goal to become a vertically integrated producer while expanding capacity. By adding a downstream component to our production cycle, we are complementing our core competency while protecting our margin profile,” remarked Mr. Gao Ren, Chairman and President of China Linen. “The acquisition will enable us to drive incremental growth by fulfilling more sizeable orders from both domestic and international customers, which we expect to further improve our financial and operational performance.”

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Forward-Looking Statement:
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