November 8, 2011
Shenzhen-listed soy crusher Dongling Grain & Oil Co Ltd sustained a loss of RMB70.68 million (US$11 million) in the first three quarters of 2011, but a turnaround is expected in the fourth quarter.
The loss occurred in the first half. The company, which is engaged in production of edible oil and soy processing saw its first-half operating profit dropped 243.13% on-year and net profit slid 238.57% due to the nation's macro control over price rise of edible oil on inflation concern and less demand for feedstuff made of soy.
Meanwhile, it processed a total of 669,300 tonnes of soy, down 12.23% on-year, and sold 555,500 tonnes of soymeal and 116,000 tonnes soyoil, down 5.08% and 15.14% on-year respectively.
With the rising price of soymeal in the third quarter, Dongling Grain & Oil post a 44.66% on-year rise in the third-quarter operating revenue and got RMB4.79 million (US$754,000) net profit attributable to shareholders. The company attributed these to the increase of selling prices and commencement of marine transport service.
Currently, the profit of soy processing moves around RMB150-200 (US$24-31)/tonne and the soymeal prices will continue to increase in the fourth quarter following the rebound of feed industry. Soyoil price will likely maintain a moderate rise amid high consumption season towards year's end. In such a circumstance, Dongling Grain & Oil Co is expected to achieve a turnaround in the fourth quarter.
The Shenzhen-listed company is shifting to medium-package edible oil from large-package ones and attempting to produce small-package edible oil so as to seize a slice of the market.
It announced in mid-September that it would place maximum 30.3 million new shares to selected investors at not less than RMB19.53 (US$3.07) per share. Total fundraising will amount to around RMB590 million (US$93 million), which will be invested into its core edible oil business to improve the industry chain from soy processing to logistics.
A new edible oil package facility will be constructed, which will be able to produce 75,000 tonnes of medium-package edible oil and 85,000 tonnes of small-package edible oil per year in its own brand.
Dongling Grain & Oil Co, which now produces soyoil, palm oil and blend oil, is eager to expand its production capacity with its advantages in imports of soy and palm oil, oil pressing technology and relatively low cost to capture bigger shares in the Chinese edible oil market.