Citic

Rise in first-half profit a 'healthy sign'

PUBLISHED : Monday, 29 August, 2011, 12:00am
UPDATED : Monday, 29 August, 2011, 12:00am

Hong Kong-listed Dah Chong Hong Holdings (DCH) announced a healthy turnover for the six months ending on June 30, mainly as a result of strong growth in distribution and dealership businesses on the mainland.

DCH recorded a turnover of HK$19.81 billion for the first six months, an increase of 39.6 per cent against the same period last year. Profit attributable to shareholders grew by 63.5 per cent to HK$801 million.

Excluding net gain on remeasurement of investment properties and other non-operating items, the group's adjusted net profit for the period amounted to HK$652 million, a growth of 29.1 per cent when compared with HK$505 million in the same period last year.

The board of directors declared payment of an interim dividend of 14.30 HK cents per share for the six months ending on June 30, compared with 10.68 HK cents in the same period last year.

Donald Yip Moon-tong, CEO of DCH, says the company's mainland business grew steadily and gave a healthy return.

Discussing motor and motor-related business, Yip says this segment continued to record a robust growth of 48.4 per cent in turnover, despite credit tightening on the mainland and supply disruptions after the Japanese earthquake on March 11.

Segment profit after taxation also grew by 44.8 per cent to HK$705 million attributable to the continued expansion of the group's 4S shop network.

'The rising demand for mid-to-high-end cars on the mainland and the continued economic recovery in Hong Kong and Macau, and the expansion of the car dealership business in Taiwan, also helped this segment,' Yip says.

He says sales of Bentley cars achieved a 65.7 per cent increase to 623 units, which raised the mainland to the second largest market for Bentley worldwide. The company appointed five more dealerships.

Isuzu and Audi car sales also picked up during the period and the company expected sales to be steady in the second half.

Yip says the market for environmentally friendly cars, such as Nissan's Leaf, is improving in Hong Kong and more buyers are keen to buy such cars. DCH sold more than 100 Nissan Leaf cars in the first half and expects to sell more in the coming months.

DCH's food and consumer products business also recorded a healthy return for the six months ending on June 30.

The segment turnover recorded a 12 per cent rise to HK$3.7 billion, mainly driven by the strong growth of the fast-moving consumer goods business. Segment results from operations on the mainland grew by 25 per cent to HK$25 million, and in Hong Kong and Macau it grew by 11.3 per cent to HK$69 million.

The company has signed a co-operation deal with South Korea's CJ CheilJedang Corporation to set up a dumpling production plant in the Xinhui Logistics Centre.

It has also signed a letter of intent with Brasil Foods to jointly develop the frozen and chilled branded food products business in Hong Kong, Macau and the mainland. In retail business, DCH has set up four new DCH Food Mart centres, extending its retail network to 82 outlets.

'We are focused in expanding our food and food products business in China. The demand for premium imported goods in China is always increasing,' Yip says. As the concern for food safety rises, the demand for premium imported goods had also increased sharply, he says.

DCH's logistics business reported an increase of 13.3 per cent in turnover to HK$188 million for the first half. The company says this is due mainly to the increase in third-party business from the Xinhui Logistics Centre.

The group has entered into a conditional sales and purchase agreement to acquire a 25,000-tonne capacity multi-temperature cold storage facility located in nearby Shanghai.

Referring to the second half of the year, Yip says he is confident the company's various business units will continue healthy growth despite the volatility in the equity markets.

'In the next six months, we expect the motor business to continue its growth momentum, and the food and logistics businesses will grow at a faster pace with all the new developments in place, creating high economic value for our shareholders,' he says.