May 13, 2010
Press Release

China Minzhong Achieves Continued Growth in 9M2010

  • 39.2% increase in revenue to RMB1,136.4 million and 37.9% rise in net profit to RMB294.6 million
  • Healthy performance attests to the Group's strategic shift towards higher-value product portfolio, which led to higher average selling prices and sales volume on strong demand
  • Strong cash position of RMB440.9 million places Minzhong in a position of financial strength for further expansion
  • Minzhong well-positioned to leverage on continued global demand for vegetables

Singapore, 13 May 2010 – China Minzhong Food Corporation Limited ("Minzhong" or the "Group") (SGX: K2N.SI), today announced its unaudited financial results for the three months and nine months ended 31 March 2010 ("3Q2010" and "9M2010" respectively).

Summary of Results

RMB ‘million 3Q 2010 3Q 2009 % Change 9M 2010 9M 2009 % Change
Revenue 524.1 384.9 +36.2 1,136.4 816.4 +39.2
Gross profit 215.8 163.0 +32.4 446.5 319.9 +39.5
Profit before tax 163.6 145.4 +12.4 349.3 255.3 +36.8
Net profit 135.3 118.0 +14.7 294.6 213.6 +37.9
EBITDA (excluding change in fair value of biological asset) 203.4 160.3 +26.9 427.9 303.9 +40.8
Gross profit margin 41.2% 42.4% -1.2 ppt 39.3% 39.2% +0.1 ppt
Net profit margin 25.8% 30.7% -4.9 ppt 25.9% 26.2% -0.3 ppt
EBITDA margin (%) 38.8% 41.7% -2.9 ppt 37.7% 37.2% +0.5 ppt

Results Review

Minzhong continued to achieve steady growth in 9M2010, achieving a 39.2% rise in revenue to RMB1,136.4 million from higher sales of both processed vegetables and fresh vegetables produce. Both businesses benefitted from the Group's strategic shift towards a higher-value portfolio, which led to higher average selling prices ("ASP") as well as increased sales volume with the positive reception from customers towards the Group's shift to a higher-value portfolio. Sales volume of fresh vegetables produce increased by 27.0% to 114,072 tonnes, resulting in a 37.6% increase in revenue to RMB373.0 million. Processed vegetables, which recorded 40% revenue growth to RMB763.4 million, benefitted from a 21.7% rise in ASP as well as a 15.0% increase in sales volume to 71,874 tonnes. Air-dried vegetables in particular, which is a highervalue product, saw a 100.4% jump in sales during the period.

In tandem with the revenue growth, the Group's gross profit rose 39.5% to RMB446.5 million while net profit increased to RMB294.6 million in 9M2010. Gross profit margin maintained at above 39% while net profit margin maintained at above 25%. Pro forma earnings per share1 for 9M2010 was RMB0.54.

On the balance sheet level, the Group's financial position remained strong, with cash position at RMB440.9 million as at 31 March 2010. Meanwhile total assets reached RMB1,892.4 million as at 31 March 2010, as compared to RMB1,423.8 million as at 30 June 2009. The increase in total assets was mainly attributable to higher cash and bank balances and trade receivables in line with the increase in revenue, coupled with capital expenditure for land improvement and further expansion of the Group's production facilities as the Group continued to execute its expansion strategy to cater to rising demand. Pro forma Group net asset value per share2 as at 31 March 2010 was RMB4.06.


Commenting on the Group's financial performance, Chief Executive Officer and Executive Director of Minzhong, Mr Lin Guo Rong said, "The Group continued to reap the fruits of our strategic focus towards a higher-value portfolio of products. We believe that the global demand for vegetables will continue to increase, underpinned by global population growth and rising health consciousness and affluence leading to a preference for healthier diets and more varied vegetable choices. Our listing on the SGX Mainboard in April 2010 which raised net proceeds of approximately S$135.5 million for the Group, coupled with our position of financial strength, have provided us with a solid platform to execute our expansion plans.

In addition, in recognition of our established track record, strong reputation and position as a leading agricultural enterprise in the PRC3, Minzhong has once again been named a "National Leading Dragon Head Enterprise" by the PRC government in May 2010, and this is an honour that the Group has received since December 2002. We will build on our strong foundation and good relationships with global and domestic customers to gain market share by expanding our cultivation bases, product range and processing facilities. We believe that with our clear and focused growth strategies in place, Minzhong is well-positioned to take advantage of opportunities from the continued strong demand for vegetables and increasing importance of the PRC as a vegetables supplier."