CPF expands China trail with new acquisition
published : 27 Oct 2016 at 06:00
newspaper section: Business
Charoen Pokphand Foods Plc (CPF), the SET-listed flagship of agro-business giant Charoen Pokphand Group, has acquired a 70% stake in a Chinese poultry firm and invested in three new companies in Taiwan, China and Thailand, with a combined investment of 2.7 billion baht.
CPF reported to the Stock Exchange of Thailand yesterday that it agreed to acquire a 70% stake of Fujian Sumpo Foods Holding Co (Fujian Sumpo), for 323 million yuan or about 1.69 billion baht.
The acquisition was made through CP China Investment Ltd (CPCI), a wholly-owned subsidiary of CP Pokphand Co (CPP) listed on the Hong Kong Stock Exchange, of which CP is partial owner.
Fujian Sumpo, registered and incorporated in China, is principally engaged in manufacturing and trading animal feed, farming and trading poultry as well as processing and trading chicken meat products in Fujian, China.
The Chinese poultry firm reported revenue totalled 6.9 billion baht in 2015, with net loss of 158 million baht.
For the first six months of the year, Fujian Sumpo reported revenue of 3.12 billion baht and net profit of 16 million baht.
According to the statement, the acquisition will allow CPP to expand its agro-food business in China.
The funding will be sourced from the cash flow of CPP Group.
CPF reported it set up a wholly-owned subsidiary, CP Food (Hengshui) in China to run manufacturing and sale of value-added processed food in Hebei, China with a registered capital of 192 million Chinese yuan.
It has also jointly invested in Rui Mu Foods in which Charoen Pokphand Enterprise (Taiwan) controls 52% of registered capital worth NT$100 million, about 110 million baht. Rui Mu Foods runs layer chicken farms.
In Thailand, the company jointly invested in Siam Rivea Co, which runs restaurants with registered capital of 5 million baht. Through CPF (Thailand) Plc, CPF controls 30% stake.
According to Capital Nomura Securities, the transactions are insignificant compared to the size of CPF's assets.
It projects that acquisition of the Chinese poultry firm will help empower CPP to expand its processed food business in China.
Currently, CPP's sales make up for 21% of CPF. Food contributes only 1% of CPP's income structure, with the rest coming from animal feed.
According to Capital Nomura, the investment in Taiwan will help expand CPF's business base in Taiwan. Sales of CPF in Taiwan now represent about 4% of CPF's total sales, mainly in chicken and swine.
CPF's share price closed yesterday on the SET at 31.75 baht, down 25 satang, in trade worth 1.14 billion baht.