Why do you say so?
How do they compare with Shenzhou/Eclat/Hansae/Youngone in terms of valuation and growth?
I think the historical results tell the story here, once you account for the noise created by fluctuations in cotton prices.
The Red Corner blog has a series of posts (and comments thereto) about Texhong, its business model and management. If I had to sum up the many thousands of words in those materials, it would be the following quote, which I've lifted from a comment to one of the posts on that blog:
I am suggesting that Texhong has important unit cost advantages in yarns and that it therefore enjoys important competitive advantages notwithstanding the fact that he product that it sells is a commodity.
You can look at Texhong's annual reports for 2006 and 2014 and contrast the following:
General & Administrative costs per metric tonne of yarn
Selling expense per MT of yarn (Selling expense = Selling & Distribution minus Transport)
The unit cost DECLINE in these two line items between these two years should sum to approximately 1450 yuan per MT. 1450/MT is 6% of the LT average selling price of yarn (24,000 RMB/MT). So a 4.5% operating margin in 2006 becomes, because of scale/scope economies, a 10.5% margin.
At constant asset turnover of 1.8x, Texhong's ROIC morphs from (1.8 x 4.5%) = 8% to (1.8 x 10.5%) = 19%
At debt/equity of 50%, ROE improves from 16% to 38%
Is it sustainable? Well the source is unit cost advantage. Yarn producers and yarn buyers are all price takers so global yarn prices -- and the therefore the prices at which Texhong sells its yarn -- do not go down just because Texhong improved its cost structure.
What will happen when it is selling a million MT of yarn? How wide will the gap be then between Texhong and the 98,000 other yarn manufacturers in the PRC?
Regarding the other companies you mentioned, are they actually comparable? Texhong makes yarn. Is Shenzou, for example, a yarn manufacturer, or is it further downstream (fabrics and garments)?