DaChan Food looking for food investments
DaChan Food, a manufacturer of poultry meat, animal feeds and processed food, launched is institutional roadshow for an initial public offering in Hong Kong last Friday. The manufacturer aims to raise up to HK$930 million ($119 million).
The listing candidate is a Mainland-based subsidiary of Taiwan-listed DaChan
Great Wall Enterprise and ranked the largest chicken slaughterer in China in
2005.
Apart from being an exclusive sourcing agent for McDonald’s in
China, DaChan is responsible for one-third of the supply of chicken meat to KFC
in China and is the largest processed food exporter for Ito-Yokado and 7-Eleven
in Japan. It is also one of the top 10 animal feed producers in China, the
second largest supplier of animal feed in Malaysia and the third largest in
Vietnam.
In 2006, 59% of the company’s revenue came from the production
of chicken meat, while the production of animal feeds contributed 35%. Processed
food accounted for only around 6% of its income, but this is expected to
increase over the next few years. The company mainly wants to invest in the
processed food section, because profit margins are much better than in producing
raw materials (meat, feed) for this sector.
To achieve this, DaChan is
going to spend more than half of the net IPO proceeds to expand its production
capacity, especially within the processed food division. The company will also
reserve funds for potential acquisitions, expansion of sales and marketing, as
well as research and development.
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