May 3, 2007

 

China's New Hope Group to issue more shares for expansion

 

 

The Board of Directors at China's New Hope Group has approved a move to issue more shares to expand its investment in feed manufacturing as well as projects in pig slaughtering and pork processing.


To raise the company's competitiveness and facilitates its business expansion, the company has issued 82 million shares to raise RMB 1.2 billion for its projects in feed manufacturing and in the live hog and pork product processing sector.
 

The feed projects would involve domestic as well as foreign ventures. Foreign ventures include a 100,000-tonne per annum capacity feed plant in Bangladesh and two other similar investments in Indonesia. In Vietnam, the company is planning to build two feed plants - one of 200,000-tonne per annum capacity and another of 100,000-tonne per annum capacity. The total cost of these 5 projects would amount to RMB 185.7 million (US$24.1 million). Revenues from these projects, once they are fully operational, would amount to US$125 million a year, with profits expected at US$6.37 million a year. 


For the Chinese domestic market, New Hope is looking at a 100,000-tonne per annum capacity feed plant in Hebei and a 200,000-tonne per annum capacity project in Hainan. The total investment in these two projects would amount to RMB 105 million. Sales revenue from these two projects is expected at RMB 580 million with profits at RMB 19.8 million.  


As for hog slaughter and processing projects, the company is investing RMB 570 million, or almost half of the total raised, to establish New Hope Food Products Shareholdings Company as a platform to invest in the sector. The company would jointly invest in pork deep processing and live hog slaughter ventures with Qianxihe's subsidiaries in Hefei and Jiangsu.


The activities were part of the company's Eastern China strategy and is expected to yield sales revenue of RMB 3.8 billion with RMB 128 million in profits.  


The company would also use part of the cash raised to repay previous investments and operational expenses. The remainder shall be added to the company's regular cashflow.


Through the restructuring of upstream and downstream operations, the company hopes to set up a completely traceable manufacturing chain which involves feed and animal production and food processing.


(RMB$1=US$0.1298)