October 29, 2007

China's DaChan Food aims to be Tyson of the East
 

DaChan Food (Asia) Ltd is setting aside US$93 million from its recent Hong Kong listing to achieve a chicken meat market share of 25 percent in China, the South China Morning Post reported.

Chairman Han Jia-hwan said the company is setting Tyson as its benchmark for growth, noting that the company has a quarter of the US chicken market.

DaChan, one of the biggest chicken producers in China, has an estimated market share in China of four percent.

DaChan Foods launched a IPO in mid-September in Hong Kong for 31 percent of its operations, hoping to raise US$119 million.

However, bird flu cases in Guangzhou blunted its effort, although demand was well above the number of shares offered. The company raised US$116 million.

Dachan was the biggest chicken slaughterhouse in China in 2005. The company is the exclusive sourcing agent for MacDonald's in China and supplies a third of China KFC's chickens.

Last year, 59 percent of DaChan's revenue was sourced from production of chicken meat, with another 35 percent from animal feed. Processed foods accounted for only 6 percent and the company is also expected to expand this sector due to higher profit margins.

DaChan's net profits are projected to rise 77 percent to hit HK$23.6 million (US$3.04 million) this year and $27.7 million (US$3.57 million) in 2008, according to FinanceAsia.com.

For 2006, the company earned HK$13.4 million (US$1.73 million), up more than five times from HK$2.6m (US$335,400) in 2004.