Chaoda ploughing 2.5b yuan into farms
Kandy Wong in Nanjing
Mainland vegetable grower Chaoda Modern Agriculture Holdings plans a 2.5 billion yuan farmland expansion to secure its status as the country's biggest vegetable producer, says chairman Kwok Ho.
He said Fujian-based Chaoda would increase its present farmland acreage by 400,000 mu (one mu is equivalent to 1/15 of a hectare) in the five years to 2013 - or an average of 80,000 mu per year - with capital expenditure of up to 2.5 billion yuan a year.
Hong Kong-listed Chaoda, which posted 51 per cent higher earnings of 1.8 billion yuan last year from a 38 per cent surge in turnover to 3.85 billion yuan, would increase its total production area to 450,000 mu next year from 363,656 mu this year, Mr Kwok said.
Seeking to reassure investors who were alarmed by the company's switching of auditors in June and also by its investments in non-core assets, he said that Chaoda would fund its expansion and fully redeem its convertible bonds in 2010.
Chaoda issued convertible bonds to raise HK$1.3 billion in April last year. Net proceeds have been used to expand its production base.
'The appreciation of the yuan helps lighten our burden to redeem the convertible bonds, which are denominated in US dollar,' he said.
Mr Kwok added that Chaoda had net cash balances of 1.6 billion yuan and expected that after the current expansion, its net cash balances would grow by another two billion yuan.
Vegetables and fruit account for 99 per cent of the company's overall turnover. It said the annual yield per mu for vegetables rose to 5.88 tonnes this year from 5.54 tonnes last year.