September 19, 2007

Taiwan's DaChan Food to launch IPO in Hong Kong

DaChan Food, a major producer of poultry meat, animal feeds and processed food in China and South-East Asia, launched its roadshow for an initial public offering in Hong Kong last week.

The IPO aims to raise up to HK$930 million (US$119 million).

Dachan Food is a Mainland-based subsidiary of Taiwan-listed DaChan Great Wall Enterprise and was the largest chicken slaughterhouse in China in 2005.

Besides being an exclusive sourcing agent for McDonald's in China, DaChan also supplies a third of the chicken supplies of KFC in China.

The company is also one of the top 10 animal feed producers in China, the second largest supplier of animal feed in Malaysia and the third largest in Vietnam.

In 2006, 59 percent of the company's revenue came from the production of chicken meat, while animal feeds accounted for 35 percent and processed food accounted for the remaining 6 percent. The company hopes to increase the share of its processed food segment in the next few years, due to its higher margins. 

DaChan would spend more than half the proceeds it gains from the IPO to expand production capacity, especially within the processed food division.

The company would also reserve funds for potential acquisitions, expansion of sales and marketing, as well as research and development.