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| Kingway Pours Funds into New Breweries |
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Leading regional beer maker Kingway Brewery will continue investing in new factories to support a steady growth of beer sales. Board Chairmen Ye Xuquan said yesterday that the company plans to spend 390 million yuan (US$48.1 million) for a new brewery in southwest China this year. That plan is awaiting board approval by the end of the week. The company also announced it had invested another 800 million yuan (US$98.6 million) in the second phase of the newly operated brewery, which will at least double the current production capacity upon completion. The company hopes such moves will help maintain a growth rate of 35 percent and a two-digit profit surge. The new investment destination will most likely be Chengdu, capital of Sichuan Province, according to a company insider. This will expand the Shenzhen-based company's production network to cover nearly the whole nation except East China. The latest investment of the Hong Kong-listed company in South China's Guangdong Province, a brewery that will produce 200,000-tonne of beer annually upon the completion of the first phase, was put into official operation yesterday. Another brewery underway in north China's Tianjin will add another 200,000-ton production capability to the company this April, which will allow the company to produce accumulative 1 million tons of beers a year. The total production capacity was about 400,000 tons at the end of 2004. "To fuel our fast growth, the annual expenditure by 2010 will amount to about 400 million yuan (US$49.3 million)," Ye forecast. The company is expected to generate 350 million yuan (US$43.2 million) cash flow this year, which could "definitely support the construction of a new brewery," he said. However, the company is not ruling out the possibility of taking out a bank loan. Already with US$38 million in bank loans, the company is allowed to borrow another 300 to 400 million yuan (US$37.0 to 49.3 million) from the bank this year before the ratio reaches the "most reasonable and safest 30 percent level," he explained. To avoid a competition with Dutch brewer Heineken, which holds a 21-percent stake in Kingway, Ye said Kingway will not set up a new plant in east China, where Heineken is developing. (China Daily February 14, 2006) |
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