July 3, 2007

 

China's Zhongpin expands in Sichuan province

 

 

China's meat processor Zhongpin Inc announced today that it has acquired Deyang East China Food Company Limited, in a US$6.6 million deal.

 

Deyang's facilities include a chilled and frozen pork processing facility located in Cangshan County, Sichuan Province. The facility has a 45,000 processing capacity for chilled and frozen pork.

 

Since Deyang was one of Zhongpin's OEM partners, it already meets Zhongpin's production quality standards.

 

Half of the production capacity of the acquired facility would be dedicated to the production of chilled pork and half to frozen pork.

 

The acquisition expands Zhongpin's presence in Sichuan Province, the largest hog producing province in China.

 

The company said the acquisition provides an opportunity to expand into southwest China, said  Zhu Xianfu, CEO of Zhongpin, Inc. Products from the facility would be distributed in Sichuan, Chongqing City and southern China, he added.

 

Zhongpin's distribution network in China spans more than 20 provinces and includes over 2,800 retail outlets. It also exports to various global markets such as the EU, Eastern Europe and Japan.

 

Last month, Zhongpin announced it is investing RMB 300 million to build a new meat industrial park in Henan province.

 

With the new facility, located in Luoyang City, Henan coming online next year, Zhongpin would have doubled its meat processing capacity by early 2008 from current levels.

 

The company currently has about a 180,000-tonne per year production capacity for chilled and frozen pork.

            

It is expected to add a total of 135,000 tonnes capacity by year end when two of its plants under construction, also in Henan province, comes online by the third quarter of the year. This would bring the company's capacity to almost 310,000 tonnes.

            

Zhongpin is experiencing an unprecedented level of growth, driven by strong demand for pork products in China, said Xianfu Zhu, the company's CEO.

 

The company reported third quarter revenue up by 86 percent on-year to a record US$33.8 million.

            

The company increased its retail outlets to more than 2,480 during the fourth quarter last year, with 72 new Zhongpin branded stores, 106 new supermarket counters and 9 new showcase stores.

           

Gross profit increased by 78.5 percent to US$5.2 million over the third quarter in 2005.