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Denise Tsang

Instant-noodle maker Tingyi (Cayman Islands) Holding Corp has joined forces with a Taiwan-listed cooking oil producer to build a US$25 million cooking oil factory in Tianjin.

In a 50-50 joint-venture, Taiwanese-controlled Tingyi and Namchow Chemical Industrial Co will make margarine and refined palm oil - key ingredients for making rice crackers and instant noodles - under the 'Master Kang' brand.

Cooking oil will also be produced for commercial purpose.

The new plant will be Tingyi's only oil manufacturing facility in China after the Beijing cooking oil factory closes in late December.

Tingyi will spend US$12.5 million on the new plant which should start production in mid-December. This will be raised from internal reserves.

Managing director Wei Ying-chiao said in Tianjin yesterday the new plant would boost Tingyi's growing snack and biscuit businesses, and its oil production and marketing.

A Nikko Research Centre analyst said the decision to set up the new factory made sense as it would help reduce material expenses significantly, despite soaring operating costs in the short term which would hurt this year's profits.

Nikko lowered Tingyi's earnings forecast for this year by about 10 per cent to US$77 million.

Mr Wei said this might be upgraded to between US$80 and US$84 million, depending on the October launch of the company's rice crackers and instant noodles in the territory.

 D.C. Lee of Croe Pacific Securities International said he had yet to adjust this year's profit forecast.

 'The decision to expand into material-related business is positive to the company in the long run,' he said.

 'This can ensure a tighter control of quality and operating costs.'  Mr Lee anticipated this year's net profit at US$92 million, against last year's US$71.39 million.

 Mr Wei dismissed any threats posed to Tingyi's expansion in the mainland market even though Taiwan had recently laid down stringent restrictions on Taiwan-listed companies investing in China.

 Mr Wei said Tingyi, registered in the Cayman Islands, would be immune to the new law.

 'We don't see our business being spoiled because of the new regulations,' he said.

 'We are an off-shore company.'  Tingyi shares finished yesterday at HK$1.69, down from HK$1.70. A total of 6.92 million shares were traded.



Noodle-maker Tingyi to produce own oils at new Tianjin factory