March 19, 2009

Beijing Sanyuan Foods Co Ltd has posted a robust 87 percent growth in full year net profit, benefiting from the sharp decline in sales of other dairy firms due to the melamine scandal.

 

According to analysts, Sanyuan's growth momentum is expected to continue this year too, as the nation's top two dairy producers - Mengniu and Yili - have yet to recover.

 

Sanyuan said on Wednesday (Mar 18) that its net profit for 2008 surged by 87.2 percent from a year before to RMB40.75 million, on sales of RMB1.41 billion, up 28.2 percent.

 

The company remained unscathed from the tainted milk crisis last year that had brought down Hebei Sanlu, the largest milk powder maker and seriously tarnished the image of Mengniu and Yili, both of which had predicted losses for 2008.

 

Mengniu said earlier this year that its 2008 losses could reach RMB900 million.

 

Sanyuan shares rose by the 10 percent daily limit on Wednesday (Mar 18) to close at RMB7.33.

 

Dairy analyst Liu Xiaofeng said the business growth is within expectations, adding that it is mainly driven by Sanyuan's increasing market share in the Beijing market.

 

Among the corporate sales of RMB1.41 billion, RMB870.73 million was from Beijing, up by 63.11 percent year-on-year, while sales from the other regions fell by 3.24 percent.

 

To enhance its national presence, Sanyuan applied and won the bid for part of Sanlu's assets for RMB616.5 million earlier this month.

 

Sanyuan said in its announcement that the company expects to achieve sales of RMB1.8 billion this year, or a 27 percent year-on-year growth.

 

Liu said that the target is not that difficult, given that consumer confidence in Mengniu and Yili are still low and they will keep losing money for some more time.

 

Sanyuan said the company intends to add new production lines and develop new markets this year.

                       

US$1 = RMB6.83 (Mar 19)