Pine Agritech eyes another record year on hike in orders

Apr 16, 2007
The Business Times

It's also confident its new product will boost profits

PINE Agritech Ltd, a China producer of soy-based health foods and food ingredients, is setting its sights on another record earnings this year on hopes of increased orders from its master distributor Shenji and with its soon-to-be-launched soybean peptide product expected to give profits an added boost.

On track for growth: A worker keeping an eye on the production process. A new plant costing 230m yuan is under construction and will be ready by June to produce 10,000 tonnes of its new soybean peptide product per annum

'We are very optimistic about our prospects,' said Parry Ng, the group's vice-president for corporate communications and investor relations.

'We are hoping for another record year . . . assuming we are able to fully deliver the minimum order to Shenji,' Mr Ng told XFN-Asia in a recent interview.

Last year, Pine Agritech's net profit surged 129 per cent to a record 538 million yuan (S$105 million) as sales jumped 98 per cent to 1.58 billion yuan.

The group signed a master distributor agreement with Shenji for its core product, soy oligosaccharide syrup (SOS) in July last year. Under the agreement, Shenji has committed to a minimum order of 700 million yuan from this year until the contract expires in 2011.

SOS is a health syrup sold as a health product under its Tian Song brand, or as a health ingredient to beverage makers. Mr Ng said recent positive developments at Shenji suggest that this commitment is on track to be achieved this year.

'On Shenji's side, they are doing things that show encouraging signs,' he said.

From July 2006 to January this year, Shenji has set up more than 300 new health stores and appointed 350 sub-distributors across 36 cities in China. Its sub-distributor space has since exceeded 600. Shenji is now planning to expand its network of health stores to 500 outlets by the middle of this year and penetrate retail supermarket chains in the second half.

'If Shenji is able to execute all these plans successfully, then there is a good chance that we (will be) able to achieve the minimum order commitment,' Mr Ng said.

Pine Agritech has yet to secure orders for its new product soybean peptide, but Mr Ng said that he is confident it could be the group's next growth driver in future.

A new plant costing 230 million yuan is under construction and will be ready by June to produce 10,000 tonnes of soybean peptide per annum.

The company said the new facility can produce the same amount of soy protein isolates, another health ingredient, if the orders for soybean peptide have not arrived by the time the plant goes on stream in June.

'Our potential clients are doing R&D and market research into this new healthy ingredient... to check the viability of this product, and we hope they (will be) able to conclude all this by the time our plant is ready so that we can go into formal discussions with them,' Mr Ng said.

'We are talking to two to three fairly big F&B (food & beverage) companies in China.' Pine Agritech hopes to sell soybean peptide to distributors for industrial uses first - which could provide sizeable orders for the new plant to take off - before selling the product under its own Tian Song brand.