Tianyi Fruit Holdings Ltd, the largest producer of frozen concentrated orange juice (FCOJ) on the mainland, expects to finalize an acquisition in the next few months, which will boost its production capacity by 25 percent, the company said Friday.

It also reported a 43 percent gain in net profit in the first half due to larger sales volume and higher prices.

Tianyi's earnings for the six months to Dec 31 stood at 131.15 million yuan, up 43.1 percent compared with the same period in 2009 as revenue rose 14.1 percent year-on-year to 209.94 million yuan.

The sales volume of FCOJ fiber, Tianyi's major revenue contributor, surged by 64 percent to 10,500 metric tons over the six-month period, during which the average selling price for FCOJ fiber shot up 26 percent to 14,830 yuan per metric ton from 11,746 yuan per metric ton during the corresponding period in 2009. The rising price and improving sales volume helped to shore up the revenue contribution of FCOJ fiber to 34 percent from 24 percent in the previous reporting period, the company said.

Meanwhile, the sales revenue of Tianyi's three other products - FCOJ, orange pulp and fresh oranges - also recorded growth despite drops in respective sales volume on the back of soaring prices.

"The prices may still be on the uptrend," Tianyi's Chief Financial Officer Hu Xu said at a media briefing on Friday, citing the rising costs of raw material.

The company is also in talks to acquire another plantation on the mainland with a FCOJ production capacity of around 5,000 metric tons. Hu said the deal will likely be closed for around 300-400 million yuan in the coming two or three months. When completed, the acquisition will help increase the company's overall production capacity for FCOJ by 25 percent, he said.

"The expanded capacity will make Tianyi better-positioned to meet the growing demand for FCOJ in the domestic market," said Hu.

For now, there is an annual demand for 80,000-100,000 metric tons of FCOJ in China, 75 percent of which is met by imports. Tianyi has a domestic market share of 10 percent. It has also been supplying the global beverage company Coca-Cola.

"The fruit juice beverage market has maintained a relatively fast growth, in particular sustained by strong demand for orange juice beverages," Chairman Sin Ke said in a statement on Friday accompanying the release of the company's interim results.

"To increase our market share in China, we will expand our production capacity through acquisition and organic growth to meet market demand, and continue to increase the area of orange grove plantation to ensure sufficient raw material supply and improve product mix," he added.

China Daily

(HK Edition 02/26/2011 page3)