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HSIDC reports 24% rise in full year net income

By Zheng Lifei (China Daily)
Updated: 2009-03-20 07:54

Henan Shuanghui Investment & Development Co (HSIDC), the listed arm of China's biggest meat processor Shuanghui Group, yesterday posted a 24 percent increase in 2008 net profit, thanks to robust meat sales and improved inventory control and production management.

Net income rose to 699 million yuan, or 1.15 yuan per share, while sales climbed 19 percent from a year ago to 26 billion yuan, the company said in its earnings report.

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The shift from soaring live pig prices, which hit a record high in the first half of last year, to the slack demand for meat products in the second half caused by the economic slump "exerted great pressure on the business", the company said.

The company, based in Central China's Henan province, slaughtered 3.17 million live pigs last year, down 16.36 percent from a year earlier, while its processed meat products totaled 834,000 tons, the Shenzhen-listed company said.

Improved inventory management and measures such as energy-saving and joint bulk procurement helped the company reduce negative impact on its business performance last year, the meat processor said.

Shares of Shuanghui Investment yesterday climbed 2.43 percent to close at 32 yuan in Shenzhen trading.

"The results are generally in line with our estimates and the company is likely to maintain such dynamic growth momentum this year," said Peng Danxue, a senior food industry analyst at Everbright Securities.

Falling pork prices and rising meat sales, Peng said, will drive Shuanghui's business performance this year as its main profit stream comes from its frozen meat products.

The meat processor, in which US bank Goldman Sachs and Cayman Islands-registered CDH Investment have a combined 51.45 percent stake, said it will spend 300 million yuan to expand its frozen meat production capacity and projects.

Meat production is expected to register 3 to 5 percent annual growth until 2010, according to the China Meat Association.

Total number of live pigs is forecast to reach 730 million next year and meat output will amount to 87 million tons, of which 14 million will be processed, the industry association said.

Shuanghui will eye both domestic and international markets and improve its product mix to maintain its leading position in the country, it said.