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SCMP Reporter

The share price of main-board-listed Chaoda Modern Agriculture (Holdings) gained 6.59 per cent yesterday as it booked a strong 56.4 per cent year-on-year surge in first-half net profit to 290 million yuan (about HK$271.75 million).

The mainland organic food producer's turnover rose 62.1 per cent year on year to 461.4 million yuan in the six months to December 31 last year, on the back of aggressive expansion of its production bases and robust sales.

Despite a doubling of its operating expenses, the company maintained fat profit margins.

Net profit margin slipped 2.3 percentage points to 63 per cent while gross profit margin was trimmed to 74.9 per cent from the 75.5 per cent posted a year ago.

Earnings per share were 17.4 fen, against 15 fen a year ago.

The company did not declare an interim dividend payment despite strong profit growth and a comfortable cash position.

Chairman Kwok Ho said: 'We will pay a dividend when our financial year ends in June.'

Chaoda is among a crop of small and medium-sized mainland companies that have caught the attention of international institutional investors because of their strong growth records.

JP Morgan Chase announced at the end of January its acquisition of a stake of about 10 per cent in Chaoda. That makes it the second-largest shareholder in the company after Mr Kwok and his wife, who own about 50 per cent of Chaoda between them.

In the six-month period, Chaoda's production bases expanded by 94 per cent year on year to 6,175 hectares, spread out in 12 provinces and major cities in China. Output, mostly vegetables, increased 44 per cent to 186,963 tonnes.

Mr Kwok said Chaoda planned capital expenditure of about 800 million yuan for the six months to June. About half of that is earmarked for expansion of its production acreage.

The firm is also building export processing centres.

Chaoda had cash of about 1.1 billion yuan at the end of last year. Mr Kwok spoke of a plan to take out a US$20 million loan, out of a US$50 million revolving loan it signed in January, to fund a yet-to-be announced major project.

Mr Kwok also said Chaoda had set up a subsidiary in Tokyo.

Exports accounted for 35 per cent of Chaoda's sales in the six month period.



Chaoda shares up as profit increases 56pc in first half