DCH's net profit up 63.5pc in first half

Dah Chong Hong Holdings said its sales on the mainland surged in the first half, although its Hong Kong sales were hit by supply-chain disruptions caused by Japan's deadly March 11 earthquake.

The Hong Kong-based conglomerate said net interim profit jumped 63.5 per cent to HK$801 million, on strong growth in car sales and in after-sales services, which made up more than 80 per cent of its turnover.

The group, whose brands include Bentley, Audi and Isuzu, said it sold 36,122 cars, on the mainland during the period, up 48.2 per cent from last year. That compared with 6.2 per cent growth in the mainland passenger car market over the same period.

DCH chairman Clement Hui said car sales could grow on the mainland by eight to nine per cent by the end of the year.

'Market tastes have changed. More buyers prefer medium- to high-priced cars to cheap ones nowadays,' he said. 'As more car owners are due to replace their old cars in the next few years the gap in sales for the two types will widen, with high-flying models enjoying a bigger-than-average growth in sales and cheaper models below average.'

The group is eyeing opportunities to expand its retail network in China through mergers and acquisitions, and Hui said some deals now under negotiation exceeded HK$100 million and might be ready for an announcement next month.

The group also sought to expand its food and consumer products operations, which grew by 35.5 per cent and 63.6 per cent respectively.

Given the surging mainland demand for high-quality food, DCH said it would strengthen its food supply chain with two recent joint ventures, one with Brazil's largest frozen food processor, BRF, and the other with a Korean dumpling-maker.

The group said it had HK$2.35 billion cash on hand and its debt-to-equity ratio stood at 16.6 per cent.