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Robust Growth in DaChan Food’s Principal Businesses Significant Rise Achieved in Overall Results



Hong Kong, 25 August 2011 – DaChan Food (Asia) Limited “DaChan Food” or the “Company”, SEHK stock code: 3999 , China’s leading supplier of chicken meat products, today announced its results for the six months ended 30 June 2011. Thanks to the improving operating environment, DaChan Food’ s efforts in optimizing operations, and the effective measures implemented in response to ever-increasing raw material and labour costs, the profitability of DaChan Food increased significantly in the first half of 2011. All of the Company’s three business segments, namely, chicken meat, feeds to external customers and processed foods, performed outstandingly, achieving remarkable results.
During the period under review, DaChan Food’s turnover increased by 12.3% to approximately RMB5.06 billion compared with the same period last year. Gross profit rose significantly by 57.4% year-on-year to approximately RMB400 million, and gross profit margin increased to 7.9%. Meanwhile, profit attributable to the equity shareholders of the Company surged by 335.4% year-on-year to approximately RMB91 million.
Looking at the different business segments, the chicken meat segment has benefited from rebounding chicken meat prices since the third quarter of last year, helping to offset rising raw material and labour costs. At the same time, DaChan Food took measures to optimize its operations during the period under review. With steady demand from customers, this segment’s turnover was up by 5.5% year-on-year to RMB2.38 billion in the first half of 2011. Gross profit surged by 1,157.5% to approximately RMB110 million, while gross profit margin also rose significantly to 4.4% from 0.4% over the same period last year.
During the period under review, the feeds to external customers business segment continued its efforts to increase sales to large-scale poultry and pig farms by expanding its sales channels and raising its brand awareness. It also continued to apply innovative biotechnologies to ensure the production of quality poultry and livestock meat products that are healthy, nutritious, environmentally friendly and affordable. As a result, this segment recorded remarkable results in the first half of 2011. Turnover increased by 8.2% to approximately RMB2.04 billion compared with the same period last year. Gross profit rose by 11.3% year-on-year to approximately RMB220 million, while gross profit margin also increased to 10.7%.
Meanwhile, the processed foods business segment maintained its strong growth momentum. Turnover increased significantly by 73.4% to approximately RMB650 million compared with the same period last year, and this segment’s contribution to the Company’s total turnover increased to 12.8%. Gross profit also grew substantially by 52.8% year-on-year to approximately RMB76 million. Increasing household incomes and the government’s continued efforts to stimulate the domestic economy have propelled the steady growth in the consumption of processed foods in China. This, coupled with DaChan Food’s efforts in optimizing its product portfolio, expanding and diversifying its sales channels, and raising its brand awareness, enabled the processed foods segment to record strong growth during the period under review. In particular, with the Chinese public’s growing concerns over food safety, the Company’s products under its “Sisters’ Kitchen” brand and its product-tracing system have been widely recognized and appreciated in the market. With its vertically-integrated business model, DaChan Food strives to ensure that all its products are safe and of high quality, and its success in this endeavour has helped it to become the preferred choice of safety-guaranteed brands among consumers. To reinforce customer loyalty, DaChan Food has introduced its second-generation safety code. The new code not only allows customers to access information pertaining to feed sources, the locations of farms and food processing plants, and test results, but also includes a photograph of the farmer. With the need for food safety in China expected to become even more paramount in future, DaChan Food’s new product-tracing system provides a solid foundation for the long-term development of its processed foods business segment.

Mr. Han Jia-Hwan, the Chairman of the Board of DaChan Food said, “In the first half of 2011, DaChan Food achieved satisfactory operational and financial results, with the support of the improving operating environment and optimized operations. As the economy of China continues to grow, its increasing urbanization and enhanced consumer power will continue to provide a favourable environment for the development of the country’s chicken meat market. The Group will seize this opportunity and continue to strengthen our reputation as a provider of safe, high-quality food. We will also strengthen our operations in different retail and supermarket channels, and enhance our brand reputation. At the same time, we will optimize the product portfolios for our feeds and processed foods business segments, step up our efforts in research and development, and focus on high value-added products, so as to reinforce our leading position in the market.”



Introduction of DaChan Food ( Asia) Limited

DaChan Food is one of the largest chicken meat products and feeds producers in China. It has a highly vertically-integrated business mode which includes chicken meat production, processed food supply and feeds production. DaChan Food supplies raw chicken meat to a number of internationally renowned companies, including KFC, McDonald’s through its exclusive purchasing agents of chicken meat – Husi and McKey and Dicos. DaChan Food was listed on the Main Board of the Hong Kong Stock Exchange on 4 October 2007.





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