CHINA Huiyuan Juice Group Ltd, the country's biggest maker of pure fruit juice, plans to spend as much as 500 million yuan (US$66 million) on new factories to meet rising demand from Chinese consumers.
"We plan to build five smaller plants in the second half that are closer to the distribution network to minimize transportation costs," Vice President Matthew Gene Mouw said in an interview yesterday in Hong Kong.
The factories will boost beverage production capacity to 2.16 million tons by year-end from 1.96 million tons, he said.
Huiyuan, which sold HK$2.76 billion (US$355 million) of stock in February to fund its expansion, is benefiting as increasingly wealthy and health-conscious consumers in the world's most populous nation switch to fruit juice from carbonated drinks, Bloomberg News said.
Net income more than tripled to 342.8 million yuan in the six months ended on June 30, the Beijing-based company said on Monday.
Excluding one-time gains and interest income from funds raised in the initial public offering, profit was up 32 percent, Chief Financial Officer Francis Ng said in an interview.
The new production bases will be set up in the Chinese provinces of Jilin, Liaoning, Shandong, Anhui and Jiangxi with an initial investment of as much as 100 million yuan each, Ng said.
Huiyuan in June acquired Jiangsu Huiyuan Food & Beverage Co Ltd to gain a production base in eastern China.
The firm is "actively" looking for acquisitions to grow and is talking with distributors in Hong Kong, Ng said.
Huiyuan increased sales 26 percent to 1.37 billion yuan in the first half. Less than five percent of sales came from exports to the United States, Europe and Southeast Asia, Ng said.
The stock fell 7.5 percent to HK$10.62 yesterday in Hong Kong, after rising 13 percent over the previous week.
Chairman and founder Zhu Xinli is the biggest shareholder with a 42 percent stake. Groupe Danone SA, the second biggest, holds 23 percent.
Juice sales may grow 11 percent a year and account for 30 percent of China's beverage market by 2010, up from 25 percent in 2005, said Euromonitor International.