SARS PLAY: Sars crisis hits People's Food profit
(traded on HKSE finance.yahoo.com )
Wednesday, May 7, 2003
biz.scmp.com
PEGGY SITO
People's Food Holdings, the mainland's biggest meat processor, has joined the ranks of companies issuing Sars-related profit warnings.
It follows the suspension of pig slaughtering at three of its five mainland plants from yesterday.
The Shandong-based company has also stopped buying live pigs from suppliers in Hunan, Sichuan, Inner Mongolia and Henan, saying the measures were introduced to minimise the risk of infection for workers.
However, other meat-processing companies, such as China Resources Enterprise-controlled Ng Fung Hong and Shenzhen-listed Luoyang Chundu Food, said they had no plans to follow suit because they had adopted precautions to counter the spread of the virus.
China Resources Enterprise said Ng Fung Hong was operating normally and it had not had any problems transporting livestock from the mainland to Hong Kong.
Analysts said logistical problems were behind the People's Food decision, with local authorities reluctant to accept livestock shipments from neighbouring provinces because of concerns about the spread of Sars.
People's Food said the precautions it had introduced would lead to declines in production and sales and they would have an adverse effect on the company's second-quarter profit.
Shares of People's Food in Hong Kong fell 12.8 per cent to HK$3.40 yesterday. Its shares in Singapore fell 14.2 per cent to 75.5 Singapore cents (about HK$3.33).
Company spokesman David Tsoi said it had decided to postpone the opening of a plant in Henan, originally scheduled for this month, until the second half of this year.
It had also postponed all plans to acquire abattoirs and meat processing facilities and there was no definite date for a resumption of normal operations.
People's Food is the largest meat processor in China, but its share of the highly fragmented market is less than 2 per cent.
Mr Tsoi said about three million pigs were slaughtered last year at the three plants it had shut down - in Xiangtan, Meishan and Tongliao. That represented just under 50 per cent of total production.
Mr Tsoi said the company did not know how long Sars would continue to affect its mainland operations.
"Therefore, it is not possible, at this stage, to quantify the potential impact on the group's results," he said.
CLSA said if the shutdown lasted three months and operations continued to be disrupted for the rest of the year, the company could see earnings cut by 7 per cent to 24 per cent. Its revised earnings forecast for People's Food this year was 767 million yuan (about HK$718 million). |
