Xinhua Far East Downgrades Youngor Group to BBB Credit Rating, Outlook Remains Stable

Xinhua Far East Downgrades Youngor Group to BBB Credit Rating, Outlook Remains Stable

March 29, 2006

    HONG KONG, March 29 /Xinhua-PRNewswire/ -- Xinhua Far
East China Ratings today downgraded the domestic issuer
credit rating of Youngor Group Co., Ltd.
("Youngor" or "the Company", SH A
600177) from A- to BBB.  The rating outlook remains
stable.

    The downgrade reflects Xinhua Far East's concerns over
the slow growth of the Company's garment business,
traditionally its main sector, and the increasing
operational risks brought about by its real estate
operations.  Moreover, sharply rising debt levels have
stretched the Company's financial flexibility.  This is
expected to continue as the Company expands its
distribution channels in the garment sector and continues
its real estate operations.

    Xinhua Far East attributes the slow growth of the
Company's garment business to the competitive nature of the
industry, both domestically and internationally.  The
Company's market position in China faces greater pressure
as more Chinese firms and foreign brands enter the market. 
Youngor's overseas sales have also been negatively affected
by the unfavorable textile trading environment and RMB
appreciation pressures.

    Youngor's garment business is likely to encounter
long-term pressures despite recording a growth rate of
12.5% in 2005, compared with less than 3% in 2003 and
2004.

    The Company's expansion into the real estate sector
inevitably brings more operating risks due to the cyclical
nature of the industry.  Real estate now accounts for a
considerable part of the Company's business, contributing
to 28.8% of total turnover and 32.9% of gross profits in
2005. 

    Xinhua Far East is also concerned about Youngor's
rising financial leverage resulting from the large capital
expenditure involved in its business expansion.  The
Company's gross debt and net debt increased almost
threefold from RMB 1.1 billion and RMB 0.9 billion at the
end of 2002 to RMB 4.1 billion and RMB 3.4 billion at
year-end 2005.  The Company's gross debt to total capital
ratio reached 48.3% at the end of 2005.  Most of the debt
was short-term in nature. 

    On the other hand, Xinhua Far East believes the
Company's rating outlook is stable, as its garment business
can still provide relatively consistent revenues and
profits, while it has gained some experience in the real
estate sector.

    Youngor Group Co., Ltd. is one of China's leading
garment manufacturers. In fiscal year 2005, the Company
realized a turnover of RMB4.6 billion.  At the end of 2005,
Ningbo Shengda Development Co was Youngor's largest
shareholder, with a 26.13% stake.

    Youngor is a large cap company constituting the
Xinhua/FTSE China 200 Index. As of March 28, 2006, its
total A-share market cap equaled RMB 6.5 billion, with
investable market cap of RMB 2.6 billion.

    For the rating report summary, please visit
http://www.xinhuafinance.com/creditrating .

    Note to Editors:

    About Xinhua FTSE China 200 Index

    Xinhua FTSE China 200 Index is the large cap index in
the Xinhua FTSE China A Share Index Series and includes the
top 200 companies in China by market cap. It is designed as
a tradable index and is calculated in real-time every 15
seconds.  For daily data and further information, see
http://www.xinhuaftse.com .

    About Xinhua Far East China Ratings

    Xinhua Far East China Ratings (Xinhua Far East) is a
pioneering venture in China that aims to rank credit risks
among corporations in China.  It is a strategic alliance
between Xinhua Finance (TSE Mothers: 9399), and Shanghai
Far East Credit Rating Co., Ltd. Shanghai Far East became a
Xinhua Finance partner company in 2003 and the first China
member of The Association of Credit Rating Agencies in Asia
in December 2003. 

    Capitalizing on the synergy between Xinhua Finance and
Shanghai Far East, Xinhua Far East's rating methodology and
process blend unique local market knowledge with
international rating standards. Xinhua Far East is
committed to provide investors with independent, objective,
timely and forward-looking credit opinions on Chinese
companies. It aims to help investors differentiate the
credit risks among the corporations in China, thereby,
cultivating their awareness and promoting information
disclosures and transparency in China market.  For more
information, see http://www.xfn.com/creditrating .

    About Xinhua Finance Limited

    Xinhua Finance Limited is China's unchallenged leader
in financial information and media,  and is listed on the
Mothers board of the Tokyo Stock Exchange (symbol: 9399)
(OTC ADRs: XHFNY). Bridging China's financial markets and
the world, Xinhua Finance serves financial institutions,
corporations and re-distributors through four focused and
complementary service lines: Indices, Ratings, Financial
News and Investor Relations.  Founded in November 1999, the
Company is headquartered in Shanghai with 21 news bureaus
and offices in 18 locations across Asia, Australia, North
America and Europe. For more information, please visit
http://www.xinhuafinance.com . 
 
    About Shanghai Far East Credit Rating Co., Ltd

    Shanghai Far East Credit Rating Co., Ltd. is the first
and leading professional credit rating company with
comprehensive business coverage in China.  It is an
independent agency established by the Shanghai Academy of
Social Sciences with the mission to develop internationally
accepted standards for capital market in China. The company
is a pioneer in conducting bond-rating business in China.
For years, it has been authorized by the Shanghai branch of
the PBOC to undertake loan certificate credit rating.

    Since establishment, it has rated over 1,000 corporate
long-term bonds and commercial papers, based on the
principles of objectivity, fairness and independence.  The
company has also maintained over 50% market share in the
loan certificate-rating sector in Shanghai for three
consecutive years.  With its strong local presence and
knowledge, it provides investors with unique and the most
insightful credit opinion.  For more information, see
http://www.fareast-cr.com .

    For more information, please contact:
 
    Hong Kong
     Joy Tsang, Corporate & Investor Communications
Director, 
     Xinhua Finance
     Tel:   [phone], or
[phone]
     Email: [e-mail]

    US
     David Leeney,
     Taylor Rafferty (IR/PR Contact in US)
     Tel:   [phone]
     Email: [e-mail]

SOURCE  Xinhua Far East China Ratings