February 24, 2012

Dachan Food seeks growth in China

Dachan Food (Asia) Ltd, China's biggest chicken meat supplier, seeks to increase supplies of own-brand products by more than 50% in three to four years, chairman Han Jia-hwan said Wednesday (Feb 22).

"We raise chickens mainly to ensure our supplies and the focus is still on the retail end," he said.

Dachan, a main supplier of fast food restaurants Kentucky Fried Chicken and McDonald's Corp, sells 200 million chickens a year in China, but has only 4% market share, leaving substantial room for growth. Han said the key issue for food producers in China was food safety.

The country has struggled to rein in health safety violations in the unruly and vast food sector, and scandals in recent years have erupted over pork tainted with chemicals, milk containing melamine and cooking oil dredged from gutters.

"China has 1.4 billion mouths, and animal protein is a new market. Food safety is a very important topic," Han said, adding that new technology means it is not necessary to rely on drugs to keep animals healthy, so consumers should not need to worry about tainted food.

The unaudited net profit of Dachan, which is 52% owned by Taiwan-listed Great Wall Enterprise, was RMB145 million (US$23 million) in the first nine months of 2011, up 253% on-year. Revenue during the period totalled RMB8.06 billion (US$1.28 billion).

Han said full-year revenue would be over RMB10 billion (US$1.59 billion), a record high. The company has not yet officially reported full-year figures.

Shares of Dachan ended up 2.82% in Hong Kong trading on Wednesday, beating the broader market's 0.33% gain. Great Wall added 1.17%.