HONG KONG, Aug. 21, 2014 /PRNewswire/ --
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| Financial Highlights |
For the Year Ended 30 June (RMB MM) |
||
| 2014 (Unaudited) |
2013 |
Changes |
|
| Revenue |
556.0 |
385.1 |
+44.4% |
| Gross profit |
260.6 |
150.5 |
+73.2% |
| Gross profit margin |
46.9% |
39.1% |
+7.8ppt |
| Net Profit |
249.1 |
99.6 |
+150.1% |
| Basic Earnings per Share |
6.8 cents |
4.2 cents |
+61.9% |
YuanShengTai Dairy Farm Limited ("YuanShengTai" or the "Company" and, together with its subsidiaries, the "Group") (Stock Code: 1431), a leading dairy farming company in China, reported a revenue of RMB556.0 million for six month ended 30 June 2014 (the "period"), up 44.4% (1H2013: RMB385.1 million). The increase was attributable to the increase in the production of raw milk while gross profit margin increased by 7.8 percentage points to 46.9% (1H2013: 39.1%). During the period, net profit surged by 150.1% to RMB249.1 million (1H2013: RMB99.6 million) with basic earnings per share of approximately RMB6.8 cents (1H2013: RMB4.2 cents).
During the period, benefited from the rising average price of high-quality raw milk and continuous expansion in overall herd size which led to the increase in production, the Group's business recorded a significant growth. In 1H2014, the sales volume reached 105,640 tons, representing a strong growth of 24.2% (1H2013: 85,079 tons).
Mr. Zhao Hongliang, Executive Director and Chairman of YuanShengTai, said, "The Chinese government has implemented a number of policies to support the development of large-scale farms at national and regional levels in the first half of 2014, including tax incentive and government subsidy for the reconstruction and expansion of standardized management of large-scale farms, which contributed to the transition from extensive farming to standardized large-scale farming. Benefited from the national policy and the increasing demand for high quality raw milk, we are confident toward the long-term business development of the Group. Looking forward, the Group will capture the opportunities in developing China's dairy products industry, especially the high-end raw milk industry, to maintain a sustainable business growth. The Group dedicated to becoming a national leading supplier of premium raw milk in order to maximize returns to our shareholders."
Business Review
As the leading dairy farming company in China, YuanShengTai is dedicated to production and sales of premium raw milk. During the period, the number of dairy cows across all four of YuanShengTai's dairy farms increased from 40,396 as of 31 December 2013 to 42,836 as of 30 June 2014. The total number of milkable cows increased from 21,544 for 2013 to 24,505 for the first half of 2014. The increase in the number of matured milkable cows in herd has enabled the Group to produce more raw milk. During the period, the average annual milk yield per cow was 9.38 tons, representing an increase of 4.2% (1H2013: 9.0 tons). It is expected that the average milk yield per cow will further increase with the maturity of the farms and a more balanced age group of herd.
Due to the rising demand for high quality raw milk, the average selling price of the Group's quality raw milk increased 16.3% from RMB4,527 per ton in 1H2013 to RMB5,263 per ton in 1H2014.
During the period, the Group maintained long-term and stable relationships with customers including the four leading dairy products manufacturers in China namely Feihe Dairy Group, Mengniu Group, Bright dairy Group and Yili Group. Feihe and Mengniu have been purchasing premium raw milk from the Group for their production of high-end dairy products since the commencement of the Company.
YuanShengTai has been exploring the development of selenium-rich raw milk with certain research institutions in order to increase the value of the products and thus meet the user's demand for raw milk with superior quality. The Group will further cooperate with the research institutions, and after satisfaction of relevant tests, the selenium-rich raw milk can be put into commercial production.
Prospects
Looking ahead, the continuous rise in per capita income and consumption levels of residents in the PRC and their growing concerns about health will continue to increase demand for high quality raw milk. The strengthened regulations enforced by relevant regulatory authorities help to promote integration of the industry, and will also be beneficial to the growth of market share for enterprises producing high quality raw milk. Besides, with the Chinese government's easing measures on the ''One Child Policy'', the space for the development of dairy products industry will be further expanded, creating favorable opportunities for continuous growth of the Group.
With advanced herd management techniques, a large scale of herd, privileged geographic environment and favorable government support policies, the Group will further expand the business scale of its super large dairy farms. The Kedong Yongjin Farm, which will have an actual designed capacity of 12,000 dairy cows, is under construction and will be put into service in the fourth quarter of 2014. The construction of Baiquan Farm, which will have an actual designed capacity of 15,000 dairy cows, is scheduled to commence in the second half of 2014. It is expected to be in service in the fourth quarter of 2015. In addition, the Group is planning to build another three farms in the Songnen Plain in the next three years, two of which will be named the Keshan Farm and the Gannan Farm, with a view to replicating the business model of operating mega scale dairy farm. Among these new farms under construction, some of them will be established as organic dairy farms in the future. As scheduled, the Group will increase its total herd size to 100,000 by 2017. Fueled by the expansion of the Group's business scale, the milk production and sales volume are anticipated to experience further increase, while the operational efficiency will be improved and the management of dairy farms will be optimized. The Group's advantage in terms of economies of scale is expected to be consolidated as a result of these favourable developments.
The Group will also explore opportunities to cooperate with overseas suppliers of dairy feed. The technologies of feeding, breeding and producing to improve production efficiency will continue to be enhanced. Meanwhile, the Group will take efforts to expand the business to upstream business through long-term cooperation with local agricultural companies to diversify revenue sources, so as to further strengthen the Group's position as China's leading dairy farming company.
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About YuanShengTai Dairy Farm Limited
Listed on 26 November 2013 on the Main Board of the Hong Kong Stock Exchange, YuanShengTai is a leading dairy farming company in China dedicated to the production of super-premium raw milk. The Company ranked No. 5 in China in terms of herd size as of 31 December 2012 and No. 4 in China in terms of raw milk production volume in 2012. The Company operates a total of 4 dairy farms, 3 in Heilongjiang and 1 in Jilin, raising a total of 42,836 dairy cows, with half-year sales volume 105,640 tons of high quality raw milk as of 30 June 2014. The standardized farming methods have enabled the Group to consistently produce raw milk of a quality that surpasses the EU raw milk quality standard, which is among the highest industrial standards for raw milk and other dairy products in the world. In further, YuanShengTai will continue to provide high quality to Chinese consumers through unified farm operations by implementing uniform farm designs and layouts, systematic operating procedures, centralized management functions and automated information systems.
