DaChan to double production capacity

PUBLISHED : Tuesday, 15 April, 2008, 12:00am
UPDATED : Tuesday, 15 April, 2008, 12:00am

DaChan Food (Asia), a supplier of chicken meat to fast food chains KFC and McDonald's, said it aims to double production capacity by the end of next year to capitalise on the rising demand for quality food on the mainland.

Chairman Mark Han Jia-hwan said last year's short supply of pigs on the mainland and rising concern over food safety has brought growing opportunities for the quality broiler industry.

'The short supply of pigs and surging pork prices have prompted more people to eat chicken, which costs less,' said Mr Han.

By the end of last year, the Dalian-based company, whose business is split among poultry feed, chicken meat and processed foods, had a production capacity of 1.5 million tonnes of feed and processed foods and slaughtered 146 million chickens.

Chief financial officer Jack Chang Chin-pyng said the company would spend US$75.3 million this year to partly fulfil the capacity expansion target.

The firm delivered a 96 per cent net profit growth last year of US$26.24 million, or 3.23 US cents per share, from US$13.36 million, or 1.78 US cents a year earlier, beating the 16 per cent growth forecast it made in its initial public offering in October last year.

Revenue jumped 40 per cent to US$894.49 million from US$637.4 million as it sold more products at higher prices, which helped lift gross profit margin to 8.5 per cent from 8.4 per cent despite rising raw material costs.

The joint venture between Taiwan's DaChan Greatwall Group and Japan's Marubeni Corp on the mainland said its strength lies in traceable chicken meat, which it sells to big fast-food chains and accounts for 20 per cent of the nation's total market of 1 million tonnes.

Shares in DaChan, which raised HK$899 million from the Hong Kong listing, closed down 3.91 per cent to HK$2.21 yesterday.