To sustain its revenue growth this year, China Agri-Industries Holdings (China Agri) will strengthen its production capacity and extend its distribution channels.
The oilseed processing business is the key driver for the group's revenue. It is expected that HK$1.58 billion will be invested in its development, representing 76 per cent of total expenditure.
The National Development and Reform Commission's opinions on promoting the development of the soybean processing industry encouraged consolidation among domestic soybean oil processors in order to cultivate larger enterprises to become more competitive, integrate production, processing and sales.
Leveraging its dominant market position on the mainland, the group plans to devote most of the capital expenditure to raising oilseed processing capacity to about 8 million metric tonnes by 2011.
During the first three months of this year, the group acquired four plants in Jiangsu, Hubei and Tianjin to turn into storage houses, and logistics and port services centres. The storage capacity is expected to increase by 280,000 tonnes.
The group also acquired China National Cereals, Oils & Foodstuffs Corporation (COFCO) for soybean crushing in Dongguan, in Guangdong, where it hopes to increase the annual volume from 600,000 to 720,000 tonnes this year. Shandong's Cofco Dongguan is expected to provide 180,000 tonnes of processed peanuts each year.
To maintain its position as the leading ethanol producer on the mainland, the group expanded its biofuel and biochemical business. It acquired Yellow Dragon in Jilin to process corn with an annual production of 650,000 tonnes. Jilin Packaging was also acquired to enhance the packaging capacity.