Mainland chicken meat supplier DaChan Food (Asia) aims to double its production capacity in two years and hopes to raise its market share in the broiler market threefold to 15 percent by 2015.

Listed in Hong Kong last year, the company will set aside $75 million of the initial public offering proceeds as the capital expenditure in 2008 to bankroll acquisitions and new plant construction.

Chairman Mark Han said the overall production capacity will grow twofold by the end of 2009 after its newly-purchased outfits start production. But he didn't provide any figures.

He also said the company is keen on acquiring medium-sized counterparts and is willing to form joint ventures.

The company announced the plans after its net profits doubled in 2007 to $26 million.

Han attributed the strong growth to the huge demand on the mainland and a $5.4 million government subsidy.

Excluding the subsidy, the company saw a 60 percent growth in net profits.

The company's turnover raised 40 percent year-to-year from $637 million to $894 million.

It recorded a 30 percent growth in chicken meat sales revenue to $489 million, while revenues from the other two core businesses - feeds and food processing - jumped 56 percent and 53 percent to $346 million and $58 million, respectively.

DaChan is one of the leading mainland chicken meat suppliers with a 5 percent share in the broiler market.

Han said the company has set a target to triple its market share to 15 percent by 2015.

Pros & cons of rising prices

The skyrocketing pork prices have severely hurt the firm's food-processing businesses in 2007, eroding their profit margins.

"Pork prices shot up sharply last year and it was hard for us to completely pass on the cost to our customers," Han said.

But he believed the pork prices will be stable this year with the government using tax and subsidy to encourage pig-raising.

In a positive way, however, hovering pork prices have driven a lot of consumers from pork to chicken, thus benefiting the firm's chicken-processing business.

"The pork-to-chicken migration is noticeable," Han said. Mainlanders consumed a total of 10 million tons of chicken last year, and half of them were imported.

(HK Edition 04/15/2008 page4)