CHANGGE and BEIJING, China, June 11 /PRNewswire-Asia-FirstCall/ -- Zhongpin Inc. ("Zhongpin", Nasdaq: HOGS), a leading meat and food processing company in the People's Republic of China, today announced that in August it will start to construct a new processing plant and a distribution center to produce chilled and frozen pork and prepared pork products and to broaden its cold-chain logistics business in the city of Jiangyan, Jiangsu province, in China.
Mr. Xianfu Zhu, Chairman and Chief Executive Officer of Zhongpin, said, "This will be Zhongpin's first production and logistics entry into the eastern China market, where we expect to create additional returns on investment for our shareholders.
"This eastern region, which includes the Yangtze River Delta with Shanghai as the center, has a large population and huge consumption potential. The Jiangyan region, in particular, is a rich and fertile growing area with abundant hogs, vegetables, fruits, and other high-quality agricultural products, and is the perfect location where we can produce our food products to serve eastern China.
"Zhongpin now has a high brand awareness in the eastern China market. We currently distribute to this market from our plants in Henan province in central China, using our high-reliability cold chain logistics system, so we have a firm foundation in the eastern China market. The newly built plant will save on our delivery costs, quicken our response to the market, further enhance customer awareness of our brand, and is expected to increase our profitability in the eastern China.
"As we have successfully done in our other market expansions, we will increase our production that is focused on middle and upper income customers, produce high-quality and safe food products, and serve several market segments. We should capture a substantial share of the market in eastern China, which will help increase our sales, profits, and returns on investment."
Construction will begin in August 2010 in two phases, with the production lines mainly for chilled pork and frozen pork and the related cold-chain logistics system to be completed in the first phase in the third quarter of 2011. The second phase, with the production lines mainly for prepared pork products, is expected to be completed in the first quarter 2012. The plant will occupy an area of 220 Chinese mu (about 36 acres). Zhongpin will invest about $63 million in the new plant, including the land use rights. About 60 percent of the plant's advanced equipment will be sourced globally. Zhongpin installs the world's most advanced production processes, quality assurance systems, integrated information technology systems, and cold-chain logistics in its plants and distribution systems to ensure the highest quality and safety of its products.
The plant's annual capacity will be about 130,000 metric tons, with chilled pork, including easy-to-cook pork, accounting for about 80,000 metric tons, frozen pork for about 20,000 metric tons, and prepared pork products for about 30,000 metric tons.
The new subsidiary company, named Taizhou Zhongpin Food Co., Ltd., will have an initial registered capital of $7.3 million. The new plant will be located in the Jiangyan Economic Development Zone of Jiangsu province.
Zhongpin Inc. is a meat and food processing company that specializes in pork and pork products, vegetables, and fruits in China. Its distribution network in China covers 20 provinces plus Beijing, Shanghai, Tianjin, and Chongqing and includes more than 3,000 retail outlets. Zhongpin's export markets include the European Union and Southeast Asia. For more information about Zhongpin, please visit Zhongpin's website at http://www.zpfood.com .
Safe harbor statement
Certain statements in this news release are forward-looking statements made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Zhongpin has based its forward-looking statements largely on its current expectations and projections about future events and trends that it believes may affect its business strategy, results of operations, financial condition, and financing needs. These projections involve risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements, which may include but are not limited to such factors as downturns in the Chinese economy, unanticipated changes in product demand, any effect from the A(H1N1) virus on Zhongpin's market or sales, interruptions in the supply of live pigs and or raw pork, poor performance of the retail distribution network, delivery delays, freezer facility malfunctions, Zhongpin's ability to build and commence new production facilities according to intended timelines, the ability to prepare Zhongpin for growth, the ability to predict Zhongpin's future financial performance and financing ability, changes in regulations, and other information detailed in Zhongpin's filings with the United States Securities and Exchange Commission. You are urged to consider these factors carefully in evaluating Zhongpin's forward-looking statements and are cautioned not to place undue reliance on those forward-looking statements, which are qualified in their entirety by this cautionary statement. All information provided in this news release is as of the date of this release. Zhongpin does not undertake any obligation to update any forward-looking statement as a result of new information, future events or otherwise, except as required by law.
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SOURCE Zhongpin Inc.