Shares of Jerash Holdings (JRSH) closed almost 4% higher on Tuesday after agreeing to acquire a manufacturing factory in Jordan for a consideration of $2.8 million. The acquisition is expected to close in August.
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Jerash produces and supplies custom, ready-made sport and outerwear to global brands. The factory being acquired, Jordan’s MK Garments, operates a 71 thousand square foot apparel production factory. The acquisition will help Jerash boost its present manufacturing capacity by 20%, translating into 2.5 to 3.5 million additional garments every year. With four factory units and a workshop, its annual capacity at the end of March was 12 million pieces.
Jerash Chairman and CEO Sam Choi said, “We expect the facility to immediately add needed capacity and give us the ability to scale up to satisfy increasing demand from new and existing customers.” (See Jerash stock chart on TipRanks)
Choi added, “All of our existing factories in Jordan are fully booked through January 2022, and customers already are placing orders that are expected to fully book the new factory from MK garments through January 2022 as well.”
Significantly, the company is actively seeking more growth opportunities as well. Its customers already include global names such as Walmart, Costco, Calvin Klein, Tommy Hilfiger, American Eagle, and Timberland.
On June 23, Lake Street analyst Mark Argento reiterated a Buy rating on the stock and increased the price target to $9 (36.2% upside potential) from $8.
Reacting after Jerash’s “Strong” Q4 performance, Argento noted a significant increase in the order book from the company’s top four customers and a fully booked capacity until January 2022.
The other analyst covering the stock, Aegis Capital’s Rommel Dionisio also has a Buy rating on the stock with the same price target as Argento.
The two ratings add up to a Moderate Buy consensus. Shares are up 35.7% over the past year.
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