Shuanghui Forecasts 52.6% Drop In 2011 Earnings


January 17 -- Henan Shuanghui Investment and Development (000895) anticipates a 49.15-52.62 percent year-on-year fall in 2011 net profit due to the clenobuterol hydrochloride scandal which broke out in mid March, and to rising raw material costs, reports China Business Daily, citing a company filing.

A subsidiary at Jiyuan, Henan province, was found last March to have purchased pigs that were fed with the banned clenobuterol hydrochloride drug.

The meat producer had posted 84.85 percent and 63.11 percent year-on-year drops in interim net profit and and third quarter earnings. It had earned 2010 net profit of 1.16 billion yuan.

An industry analyst said Shuanghui had done well to boost sales back to the levels before the scandal, and predicts earnings per share (EPS) of 0.46 yuan in the fourth quarter, largely unchanged from previous years.

Ping An Securities forecasts EPS of 1.73 yuan in 2011, 3.31 yuan in 2012, and 4.34 yuan in 2013.

Wen Xian, an analyst at Ping An Securities, gave a Strong Recommend rating for the company as product sales and the profits of its slaughtering business have recovered to pre-scandal levels.

Shares of the company rose 1.27 percent to close at 66.33 yuan per share today.


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