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Supply Chain Firm Plans $17 Million IPO

Supply chain management (SCM) services firm Majestic Ideal Holdings Ltd. is planning to raise around $17 million in a U.S. public offering this year.

Majestic, an offshore holding company incorporated in the Cayman Islands, operates as a one-stop shop for fashion wholesalers and online retailers sourcing yarns, textiles and finished garments. Its operating firm New Brand is based in Shanghai.

Products include pure cashmere and cashmere-mix yarn, along with merino wool, cotton and fancy yarn. It also sells knitted panel, or processed yarn product, customizable to a manufacturer’s specifications. Majestic sources raw materials from third-party vendors in China. It warehouses raw materials to buffer against price volatility.

Majestic’s clients can place custom orders for finished garments, where it specializes in casual and office apparel for career women ages 26 to 60.

“Our service offerings encompass every key aspect of the supply chain of these products: market trend analysis, product design and development, raw material sourcing, product and quality control, and logistics management,” Majestic said in a regulatory filing with the Securities and Exchange Commission last month. “We are capable of turning a design concept into finished garments under a short lead time.”

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Majestic’s knitwear business, part of a larger holding company, was founded in 2013 through a Hong Kong firm called Multi Ridge which then established New Brand in 2014 to provide apparel SCM services in China.

The IPO will offer 3.75 million shares in total, at $4.5 per share, raising nearly $17 million. The shares are comprised of 2.5 million ordinary shares plus 1.25 million shares from a selling shareholder. The company plans to trade on the Nasdaq Capital Market under the symbol “MJID” with a potential market value of $62 million.

From the $11.25 million raised after selling 2.5 million ordinary shares, the company expects to use $9.4 million in net proceeds to buy raw materials, increase marketing activities to reach new customers, increase efficiency and collaboration with suppliers and logistics service providers, explore sustainable raw materials, and keep the business running.

For the year ended Sept. 30, 2022, Majestic reported net income of $1.0 million on revenue of $16.10 million, comprised of $15.3 million on sales of yarns and $780,944 from sales of finished garments. Yarn sales accounted for 95.2 percent, while finished goods sales made up the rest of the business.

Majestic requires customers to make a deposit of 30 percent and 50 percent of the total order price. Clients pay the rest of their invoice before they take delivery, but some customers, usually bigger companies, might get away with 90-day credit terms. The credit period for finished garments is 40-90 days. “We do not allow our customers to unilaterally terminate their orders,” said Majestic, which employs nine full-time China-based staff.

Although the current climate isn’t IPO-friendly, J. Peterman owner JP Outfitters Inc. also recently filed to publicly trade on the Nasdaq Capital Market.