Merchant House International (ASX:MHI) surges 166pc on subsidiary sale

• Citing subdued economic conditions in China, Merchant House International (MHI) has decided to sell its subsidiary, Carsan Manufacturing
• The company has executed an agreement to sell Carsan Manufacturing — which owns the assets used in producing home textiles in China — for RMB135 million (roughly A$267.3 million)
• In explaining its decision for disposal, Merchant House referenced increasingly difficult economic conditions in China, the sourcing of raw materials, increased costs of production, adverse exchange rates and growing competition from other markets
• The news sent shares in the textiles manufacturer soaring, which is sitting as the top gainer on the ASX today after surging 219 per cent at its peak
• Merchant House International shares are up a stellar 166 per cent to trade at 12.5 cents

Citing subdued economic conditions in China, Merchant House International (MHI) has decided to sell its subsidiary, Carsan Manufacturing.

The Hong-Kong based textiles manufacturer is sitting as the top gainer on the ASX today after making the announcement, which sent its share price soaring 219 per cent at its peak.

Carsan Manufacturing is the subsidiary entity of the MHI Group, which owns the land and factory dedicated to the production of home textiles in China.

MHI’s board has elected to sell the subsidiary to Foshan XiongYing Logisitics for RMB135 million (roughly A$267.3 million), whereby the buyer will assume liability for any capital gains MHI may incur from the sale.

In explaining its decision for disposal, Merchant House referenced increasingly difficult economic conditions in China, the sourcing of raw materials, increased costs of production, adverse exchange rates and growing competition from other markets.

Merchant House confirmed none of its directors are associated with XiongYing.

Merchant House International shares are up a stellar 166 per cent to trade at 12.5 cents at 12:50 pm AEST.