Aug 25, 2010
China Minzhong Reports Over 25% Growth in Revenue and Net Profit in First Full Year Results Following Listing
- Revenue rose 34.5% to RMB1,422.6 million
- Gross margin remained strong at 40.4%
- Net profit up 27.6% to RMB367.5 million in tandem with higher revenue
- Strong operating cash inflow up 185.4% to RMB610.6 million in FY2010
- Cash position of over RMB1 billion to fund expansion plans
China Minzhong Food Corporation Limited ("China Minzhong" or the "Group") (SGX: K2N.SI), today announced its unaudited financial results for the full year ended 30 June 2010 ("FY2010"). In China Minzhong’s first set of full year results after listing, the Group reported a 27.6% increase in net profit from RMB288.1 million in FY2009 to RMB367.5 million in FY2010.
Summary of Results
|RMB ‘million||FY2010||FY2009||% Change||4Q 2010||4Q 2009||% Change|
|Gross margin (%)||40.4%||40.0%||+0.4 ppt||44.7%||42.9%||+1.8 ppt|
|Profit before tax||432.7||343.7||25.9%||83.4||88.4||(5.6%)|
|EBITDA (excluding change in fair value of biological assets)||535.4||410.8||30.3%||107.5||106.9||0.5%|
|Net cash from operating activities||610.6||214.0||185.4%||384.7||107.5||257.9%|
FY2010 Results Review
China Minzhong continued its steady growth trend with a 34.5% increase in revenue to RMB1,422.6 million in FY2010, and higher sales in both the processed products and fresh vegetables produce segments. Processed products constituted 67.7% of the Group’s revenue in FY2010 with the remaining 32.3% coming from fresh vegetables produce.
Revenue from the processed products segment rose 33.0% to RMB962.5 million on the back of (i) higher sales volume for the Group’s air-dried, brined and freeze-dried products (22,953 tonnes in FY2010 versus 14,635 tonnes in FY2009) and (ii) continued shift towards a highervalue product portfolio underpinned by a 103.2% increase in the sales of the Group’s air-dried products, which led to a 35.4% increase in ASP.
Revenue in the fresh vegetables segment increased 37.7% to RMB460.0 million, mainly due to (i) a 24.8% increase in total cultivation volume to 137,100 tonnes and (ii) shift towards a higher value fresh vegetables product portfolio. In particular, the Group has been increasing its cultivation volume for king oyster mushrooms, which commands higher selling prices and better margins.
Gross profit grew by 35.6% to RMB574.3 million, in line with the increase in revenue. Overall gross margin improved slightly by 0.4 ppt to 40.4%. In tandem with the higher gross profit, the EBITDA increased by 30.3% to RMB535.4 million. Excluding net exchange loss and one-off IPO-related expenses, our adjusted EBITDA would have increased by 33.2% to RMB555.4 million.
Commenting on the Group’s financial performance, Chief Executive Officer and Executive Director of China Minzhong, Mr Lin Guo Rong said, "We are pleased to deliver a very strong performance in our first full-year results after public listing. Our efforts in ensuring quality, food safety as well as our strategic focus on higher-value portfolio of products have paid off over the years. This year, we were once again named a "National Leading Dragon Head Enterprise" by the PRC government (eight consecutive years since 2002) and we will continue to build on this established track record and success."
Strong Cash Flow
Net cash generated from operating activities increased from RMB214.0 million in FY2009 to RMB610.6 million in FY2010, underpinned by higher sales and better working capital management. As of 30th June 2010, China Minzhong’s cash position amounted to MB1,170.5 million.
The global consumption demand for both fresh vegetables and processed vegetables remains robust, fuelled by population growth, increased urbanization and rising affluence as well as preferences for healthy dietary eating habits. China Minzhong will continue to benefit from both the growing domestic consumption in the PRC, and its emergence as an increasingly important vegetables supplier to the world.
Commenting on the Group’s outlook, Chief Executive Officer and Executive Director of China Minzhong, Mr Lin Guo Rong said, "With clear and focused growth strategies in place, China Minzhong is poised to take advantage of opportunities from the continued strong demand for vegetables and increasing importance of the PRC as a global vegetables supplier. With our strong cash position of over RMB1 billion, we are well-positioned to fund our expansion plans going forward and take advantage of this growth trend."