November 30, 2011

 

 

Sumpo Food Holdings, a Chinese chicken meat products supplier that is listed on the main board in January, will consider acquisition-led growth beginning 2013, a senior executive said.

 

Executive director, Wu Shiming, did not elaborate but said the company is also interested in the packaged food industry, where margins are higher.

 

Fujian-based Sumpo raised HKD283.9million (US$36.4million) when it listed, reports The Standard.

 

In August, the company said HKD269.2million (US$34.5million) of the proceeds remains unused.

 

Its core business is chicken products, but the company also breeds broilers and sells animal feed. Among its biggest customers are KFC, fast-food chain Dicos, which is operated by Ting Hsin International Group of Taiwan, and McKey, a subsidiary of Keystone Foods.

 

Mr Shiming said Sumpo adjusts its prices each quarter, but products are priced differently for large buyers.

 

"We will give a small discount to KFC, which is a big client," said Wu, adding the price cut is well below 10%.

 

Kentucky-based Yum Brands said in October that its China division operates more than 3,475 outlets. KFC China sales increased 19% in the third quarter ending September.

 

KFC has raised prices twice this year, including one earlier this month.

 

As demand continues to rise, Wu said Sumpo will expand capacity and set up new breeder farms.

 

Following the commissioning of a slaughtering and processing plant in Longyan last month, Mr Shiming said capacity will increase from 18million broilers a year to 54million.