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| Friday, July 03, 2009 16:25:18 |
Update: Zhongpin and the business of pork
The China Perspective caught up with Zhongpin Inc (HOGS.NASDAQ) executive vice president Ben Baoke in July to ask about the NASDAQ-listed company’s growth prospects. The country’s fourth largest meat processor has recently raised its income guidance for 2008 so we felt it was a good time to check back in. What are the major factors contributing to your positive outlook and do you see these trends continuing into 2009?The Chinese government’s supportive policies on hog farming really had an impact during the third quarter of 2008. Driven by an increasing hog supply, hog and pork prices began to decline in the third quarter, reducing the burden of rising costs for meat processors. As a result, we experienced robust growth in our sales volume due to lower pork prices and additional capacity from our Luoyang plant which came into production at the beginning of the third quarter. Traditionally the first and fourth quarters are peak seasons in our industry and we expect the additional capacity from the Luoyang plant to further contribute to our revenue growth. We are confident in our ability to achieve our full year 2008 guidance.Our growth in 2009 will come mostly from production volume increase and product mix improvement. We expect a steadily growing demand from Chinese consumers for pork, especially the high-quality and healthy pork offered in the dry market. To meet this demand, we plan to expand our production capacity and improve our utilization rate. At the same time, we will focus on the development of high value-added products such as prepared meat products and further-processed pig by-products What is your market share of the chilled and frozen pork markets and how much more room for expansion do you see?By sales revenue in 2007, Zhongpin is the 4th biggest pork processor ...
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