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Chicken Supplier to Explore Acquisition-Led Growth

by 5m Editor
28 November 2011, at 6:46am

HONG KONG - Chicken meat products supplier Sumpo Food Holdings (1089), which listed on the main board in January, will explore acquisition-led growth from 2013 onwards, a senior executive said.

Executive director Wu Shiming did not elaborate but said the company is also interested in the packaged food industry, where margins are higher.

Fujian-based Sumpo raised HK$283.9 million when it listed, reports The Standard.

In August, the company said HK$269.2 million of the proceeds remains unused.

Its core business is chicken products, but the company also breeds broilers and sells animal feed. Among its biggest customers are KFC, fast-food chain Dicos, which is operated by Ting Hsin International Group of Taiwan, and McKey, a subsidiary of Keystone Foods.

Mr Shiming said Sumpo adjusts its prices each quarter, but products are priced differently for large buyers.

"We will give a small discount to KFC, which is a big client," said Wu, adding the price cut is well below 10 per cent.

Kentucky-based Yum Brands said in October that its China division operates more than 3,475 outlets. KFC China sales increased 19 percent in the third quarter ending September.

KFC has raised prices twice this year, including one earlier this month.

As demand continues to rise, Wu said Sumpo will expand capacity and set up new breeder farms.

Following the commissioning of a slaughtering and processing plant in Longyan last month, Mr Shiming said capacity will increase from 18 million broilers a year to 54 million.

Shares of Sumpo closed unchanged at 66 Hong Kong cents on Friday.