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DaChan's Profits Turned Around With Significant Growth in Gross Profit

| Source: DaChan Food (Asia) Limited

HONG KONG, Aug. 8, 2014 (GLOBE NEWSWIRE) -- As the leading chicken meat products supplier in China, DaChan Food (Asia) Limited ("DaChan Food" or the "Company", stock code: 3999) announced its results for the six months ended 30 June 2014 on 7 August. During the period, the Group has come out from the effect of the Fast-Grown Chickens, H7N9 and a prolonged downturn in the breeding and rearing industry, each segment recorded growth in profit. The feed and meat segments recorded double digit growth in gross profit, and particularly, the gross profit of domestic food segment grew 25.8% and the overall gross profit of the Group increased 13.1% compared with last year. As the market condition improved, the meat segment successfully achieved a growth in turnover of 11.2%. Although the situations of domestic economy and the breeding and rearing industry steadily improved in the first half of the year, meat prices have not recovered to the average level of the same period last year. As such, the overall turnover of the Group slightly increased 2.4% to RMB5.56 billion.

During the period, overseas feed segment recorded robust growth with rises in both sales volume and price, which together with effective cost control of raw material resulted in growth of 14.5% and 31.9% in turnover and gross profit respectively. As for mainland feed, sale volume was substantially the same as last year under the influence of a depressed swine farming industry in China. However, benefited from improvement in sales mix, cost control and decrease in raw material price, gross profit still increased 17.8%. The professional catering market of the mainland food segment continued to expand business scale and regions covered, strengthened its sales team and achieved steady growth in the first half of the year. However, international food business was affected by price competition. Besides, due to product upgrade and menu changes of food and catering chain cooperation partners, this led to a temporary decrease in sale volume during alignment, which in turn led to the decrease in total income from domestic food segment. In contrast to successive years of positive growth in the past, turnover of the food segment decreased 16.3% in the first half of the year. It is worth noting that domestic food business managed to secure a significant gross profit growth of 25.8% due to lower prices of meat, as of raw material decreased, and improved product mix.

Meanwhile, DaChan Food maintained healthy financial position. As of 30 June, the Company had net assets of approximately RMB2 billion, and its current ratio and gearing ratio was 1.61 times (1.80 times in the previous period) and 51.0% (41.3% in the previous period) respectively.

The downturn of the China's breeding and rearing industry had lasted for two years and it finally and gradually rebounded in the latter part of the second quarter and showed a firm positive trend. A recovering economy, improving supply and demand of the breeding and rearing industry and sustained increase of consumption power will effectively drive the turnaround and improvement in the results of the Group. The promulgation of specific government policies favourable to agriculture will also facilitate the progress of the Group in rural development and cooperation with farmers. In the future, the Company will adhere to the strategy of "food processing and brand building" and enhance brand influence and profitability of feeds through sophisticated product research and development and precise market positioning. Basing on outstanding technology and cooperation model of contract farming, the Company will strengthen breeding management and cooperation with farmers. It will also increase the sale proportion and product value of fresh meat, and constantly expand the regions covered by breeding and rearing. The food segment will steadily expand its business regions, establish sales team and sales channels, and drive results with research and development and services.

Mr. Han Jia-Hwan, Chairman of the Board of DaChan Food, said, "The Group's strategy of 'food processing, brand building and risk elimination' secured its competitiveness and helped it to avoid further losses during the period of market downturn and enabled it to take up market share proactively when the market recovers. During the first half of the year, the Group was unharmed from anti-China demonstration in Vietnam and recently the Group have also passed the government's strict inspection on food processing factory, both reflecting the solid base of the Group in risk control. The traceable safety food system enabled the Group to withstand challenges and will also guarantee a promising future for the Group. In the second half of the year, the Group's traceable platform authentication preparation will be completed, while the establishment of self-operated e-commerce platform and new media sales channels are currently in progress, which will bring it closer to the consumers through diversified and vivid ways and enhance the market share and influence of the "Sister's Kitchen" products in the end market."

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