August 18, 2011


Taiyang Poultry's H1 profit up on breeding unit sales


Chinese duck integrator Anhui Taiyang Poultry Co Inc announced a 34.2% rise in first-half gross profit to US$4.6 million, spurred by a 140.8% revenue jump in its higher-margin Breeding Unit.


The company's revenue in the first six months of 2011 was US$16.1 million, while net income totalled US$2.1 million or US$0.20 per basic and diluted share based on 10.2 million shares.


Breeding Unit sales increased during the first half of 2011 primarily as a result of higher demand and market prices for ducklings in China, which average price stood at US$0.89 compared with US$0.45 for the same period in 2010.


As the company generates its own ducklings from its biological assets, the cost of producing new ducklings does not fluctuate with the market selling price for the ducklings, said Chief Executive Officer and Chairman Wu Qiyou. At current industry pricing, the company maximised its profits by selling internally generated ducklings directly into the market, as opposed to using them as inputs for Food Unit products, he added.


The market price of packaged Food Unit products does not fluctuate as immediately with the market price of the input ducklings. Average sales price for grown commercial processing ducks was approximately US$1.09/kg during the six-month period of 2011 versus US$0.87/kg in the prior year.


As a result of the increased revenue from the Breeding Unit, first-half consolidated revenue decreased by US$3.6 million, or 18.2%, but gross profit increased US$1.2 million, or 34.2%.


Food Unit revenue was down for the first six months of 2011 due to higher market prices for ducklings, which resulted in ducklings being sold to the market rather than being used internally by the Food Unit to be processed and sold as food product.


Founded in 1996, Anhui Poultry raises, processes and markets ducks and duck-related food products through three business lines. The company specialises in the breeding, hatching and cultivation of ducklings for resale and processing by its food processing unit, production of duck feed for internal use and external sales, and processing of commercial ducks into frozen raw food product for commercial resale.

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